Gold, silver rally as Fed's Waller cuts September hike odds - Kitco PM Report

Spot gold and silver prices are sharply higher in late-afternoon U.S. trading Thursday, as Fed Governor Christopher Waller’s less-hawkish rate comments pulled Treasury yields lower, weakened the U.S. dollar and gave precious metals room to extend Wednesday’s rebound.

At the time of writing, spot gold was trading near $4,471.10 an ounce, up 1.92%, while spot silver was trading at $66.830, up 2.49% on the session.

North American equity markets closed sharply higher as technology shares led a broad risk rebound. The S&P 500 rose 81.11 points, or 1.1%, to 7,747.71, the Dow Jones Industrial Average gained 624.16 points, or 1.2%, to 53,686.11, and the Nasdaq Composite added 366.23 points, or 1.4%, to 26,584.06.

European markets also finished higher, with the STOXX Europe 600 up 0.49% to 649.10. London’s FTSE 100 rose 0.70% to 10,831.52, Germany’s DAX gained 0.63% to 26,003.32, France’s CAC 40 added 0.07% to 8,286.40 and Italy’s FTSE MIB rose 0.88% to 52,245.47.

The latest positioning shifted back toward a Fed pause after Waller said he would be inclined to keep rates unchanged if next week’s inflation data continue to cool. September hike odds fell to about 50.4% from 63.2% Wednesday, while the two-year Treasury yield slid to 4.34% and the 10-year yield dropped to 4.77%.

The services data were not uniformly dovish: the ISM services index rose to 55.4 in August from 54.1, prices paid climbed to 72.6, the highest reading since October 2022, and employment remained in contraction at 47.8. That mix leaves Friday’s August nonfarm payrolls report and the Sept. 11 CPI release as the next two decisive inputs for Fed pricing.

For gold, the signal is constructive but conditional: lower yields and a softer dollar support the rebound, while firm services demand and sticky input prices keep the inflation channel alive. Precious metals rallied because the yield shock paused, not because the inflation problem disappeared.

Gold bounced from Wednesday’s $4,281.70 low, traded as high as $4,511.70 and moved back toward the $4,489.87 to $4,538.77 retracement band flagged in the latest technical work. Silver pushed to $67.60 before easing, reclaiming the $66.00 decision level but still stopping short of the more important $67.21 to $68.74 resistance ladder.

The short-term setup now depends on payrolls: a softer report would validate the Waller pause trade, while a firmer jobs and wage print would put the dollar and front-end yields back in control.

The Strait of Hormuz remains the main geopolitical channel into oil, inflation expectations and defensive demand, but Thursday’s market impact was smaller than earlier in the week. Iran fired at Kuwait in retaliation for U.S. bombardments, and fighting has intensified since U.S. strikes hit Iranian rocket launchers on an island in the strait.

Oil ended little changed after an early rise, with WTI settling at $91.30 a barrel and Brent at $95.52. For gold, the setup remains supportive but conflicted: Hormuz risk keeps a defensive bid under bullion, while crude near six-week highs sustains inflation pressure and limits how far Fed-rate relief can run.

The key outside markets see Nymex WTI crude oil prices firmer and trading around $91.30 a barrel, while Brent crude was near $95.52. The yield on the benchmark 10-year U.S. Treasury note is trading near 4.77%. The U.S. dollar index is softer.

Technically, spot gold bulls' next upside price objective is to push prices back above the $4,489.87 resistance level, with a sustained move targeting $4,532.67 and then $4,538.77. Bears' next near-term downside price objective is a break below $4,369.00, with deeper downside targets at $4,301.00 and then $4,263.00. First resistance is seen at $4,489.87 and then at $4,532.67. First support is seen at $4,369.00 and then at $4,301.00. Spot silver bulls' next upside price objective is to dr...