Gold slips from three-month high as Treasury buybacks, Iran risk frame trade - Kitco AM Report

Spot gold prices are modestly lower, while spot silver prices are seeing a deeper struggle in early U.S. trading on Tuesday, as a firmer U.S. dollar prompted some profit-taking after gold briefly approached the $4,700-an-ounce area overnight. At the time of writing, spot gold was trading near $4,634.90 an ounce, down 0.34%, while spot silver was trading at $67.900, down 1.36% on the session.

The latest market positioning remains split between softer growth data and a Fed that still has not defeated inflation. July nonfarm payrolls fell by 23,000, CPI slowed to 3.4% year over year and core CPI eased to 2.5%, but the July FOMC minutes showed three policymakers favored a 25-basis-point hike and many participants remained open to higher rates if inflation fails to cool. Fed funds pricing has moved away from a clean easing narrative, with traders now focused on Wednesday’s PCE inflation report and Fed Chair Kevin Warsh’s Jackson Hole speech Friday for confirmation that the current 3.50% to 3.75% target range is restrictive enough.

The U.S. Treasury Department’s long-end buyback plan remains the dominant cross-asset story. Treasury is planning to at least double liquidity-support buybacks in the 10-year to 20-year and 20-year to 30-year sectors to at least $4 billion per operation from $2 billion, starting Sept. 9 and running through Nov. 4. The initial decline in long yields has faded, leaving the 10-year Treasury yield near the 4.7% area and the 30-year yield still above 5.2%. That mix has unsettled global bond markets, supported the dollar at the margin and strengthened gold’s appeal as a hedge against sovereign-debt stress, fiscal credibility risk and possible currency debasement.

Ipek Ozkardeskaya, senior analyst at Swissquote, said this morning that “renewed appetite for gold despite elevated long-term US yields is striking.” She framed the move as a hedge against unclear U.S. fiscal plans, inflation and possible risk-asset volatility tied to high valuations and AI financing. Ozkardeskaya also said gold ’s longer-term support is coming from a broader de-dollarization trade as global institutions diversify away from Treasuries and toward gold, while warning that overbought conditions could still produce pullbacks.

The Strait of Hormuz remains a residual risk premium rather than a full supply-shock trade this morning. Oil prices fell to one-week lows as traders judged the latest U.S. sanctions threat against Iran as less immediately disruptive than a military escalation, with Brent near $91.82 a barrel and WTI near $84.60. The risk has not cleared. A tanker was disabled northeast of Oman after being hit by an unidentified projectile; only two commodity vessels transited Hormuz on Monday and Iran has blacklisted 45 tankers for alleged violations of its passage rules. Gold is holding a haven bid from the same risk complex, while crude’s pullback has eased some near-term inflation pressure on yields.

U.S. traders are watching the S&P CoreLogic Case-Shiller home price index at 9:00 a.m. ET, followed by new home sales, the Conference Board consumer confidence index and the Richmond Fed manufacturing index at 10:00 a.m. ET. Wednesday brings July PCE inflation, durable goods and the second estimate of second-quarter GDP. The key question for metals is whether softer demand data can offset inflation and fiscal-risk concerns strongly enough to cap yields.

The key outside markets see Nymex WTI crude oil prices lower and trading around $84.60 a barrel, while Brent crude was near $91.82. The U.S. dollar index is steady to firmer. ( Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.)The yield on the benchmark 10-year U.S. Treasury note is trading around 4.7%. Technically, spot gold bulls’ next upside price objective is to push prices back above the $4,654 to $4,689 resistance zone, with a sustained move targeting $4,780 and then the April swing-high area near $4,891. Be...