Gold, silver rally as weak payrolls cut Fed hike pressure - Kitco PM Report

Spot gold and silver prices rallied after the North American equities close Friday, as a negative July payrolls print pulled Treasury yields lower, softened the U.S. dollar ( Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.) and eased pressure on the Federal Reserve to raise rates again in September. At the time of writing, spot gold was trading near $4,340.60 an ounce, up 2.39%, while spot silver was trading at $63.350, up 3.19% on the session. The July jobs report moved the rate trade back in favor of metals. Nonfarm payrolls fell by 23,000, while the unemployment rate held near 4.1% , forcing markets to reprice the July 29 Fed message against weaker labor data. The FOMC held the target range at 3.50% to 3.75% by a 9-3 vote. Chair Kevin Warsh used the post-meeting press conference to reinforce the inflation mandate, saying, “There is only a target.” After the payrolls miss, the 10-year Treasury yield fell to 4.64% from 4.67% just before the release, after touching 4.60% intraday. Equities closed stronger on both sides of the Atlantic as investors treated the weak labor print as a constraint on near-term Fed tightening. In North America, the S&P 500 rose 0.6% to 7,757.64, the Dow Jones Industrial Average gained 0.3% to 54,036.93 and the Nasdaq Composite advanced 1.3% to 26,690.62. The Russell 2000 ETF rose 1.08%, while the S&P 500 ETF gained 0.59%, the Dow ETF added 0.25% and the Nasdaq 100 ETF rose 1.17%. In Europe, the STOXX Europe 600 closed up 0.31% at 660.25, the FTSE 100 rose 0.31% to 10,901.09, Germany’s DAX gained 0.69% to 26,319.45, France’s CAC 40 rose 0.17% to 8,714.93, Italy’s FTSE MIB gained 0.06% to 53,717.19 and Spain’s IBEX 35 slipped 0.02% to 20,176.00. The U.S.-Japan yen intervention has become a broader currency-market input rather than a Japan-only story. For gold, the impact is supportive through two channels: a softer dollar mechanically lowers the hurdle for dollar-priced bullion, while overt official action in FX markets adds to demand for reserve and liquidity hedges. The offset is that intervention has not erased the U.S.-Japan rate gap, so the gold impulse depends on whether yen strength broadens into a durable dollar decline. The Strait of Hormuz trade remains a two-sided risk for gold, oil and rates. Talks aimed at reopening the chokepoint pulled crude lower earlier in the week, but no final deal had been signed by the U.S. close. The sticking points include Iran’s leverage over traffic through the strait, proposed fees, the lifting of the U.S. blockade and parallel hostilities involving Yemen’s Houthis, Saudi Arabia, Israel and Hezbollah. The result is a thinner geopolitical risk premium than at the peak of the disruption, but not an all-clear. Gold drew more support Friday from lower yields and a weaker dollar than from immediate safe-haven demand, while crude held a residual supply-risk bid into the weekend. The key outside markets see Nymex WTI crude oil prices higher and trading around $78.18 a barrel, while Brent crude was near $83.55. The U.S. dollar index was weaker after the jobs report. The yield on the benchmark 10-year U.S. Treasury note was trading near the 4.6% area. Technically, spot gold bulls’ next upside price objective is to push prices back above the $4,360.00 to $4,380.00 resistance zone, with a sustained move targeting $4,480.00 and then $4,500.00. Bears’ next near-term downside price objective is a break below $4,300.00, with deeper downside targets at $4,200.00 and then the $4,180.00 area. First resistance is seen at $4,360.00 and then at $4,380.00. First support is seen at $4,300.00 and then at $4,200.00. Spot silver bulls’ next upside price objective is to drive prices back above the $65.00 to $66.00 area, with a move above that zone targeting $71.00. The next downside price objective for the bears is a break below $61.00, with deeper downside targets at $60.00 and then the $56.00 to $57.00 zone. F...