Driven by rising US wholesale inflation, surging crude oil prices and climbing US Treasury yields, spot gold and silver fell sharply in late US trading on Thursday, even though safe-haven demand stemming from the US-Iran war continued to underpin the market. At the US close, spot gold settled at $4316.52 per ounce, down $84.97 or 1.93% on the day; spot silver stood at $63.557 per ounce, with a loss of 5.52%. #GoldMarketWrap#

(Source: FX168)

Meanwhile, North American and European equities closed broadly lower, reflecting pressure on risk assets from higher oil prices and bond yields. The S&P 500 dropped 44.66 points, or 0.6%, to 7591.70; the Dow Jones Industrial Average fell 316.56 points, or 0.6%, to 52064.10; the Nasdaq Composite shed 171.62 points, or 0.7%, to 26081.72; the Russell 2000 lost 30.29 points, or 1.0%, to 2890.95. In Europe, the STOXX Europe 600 closed 0.69% lower at 635.97; the FTSE 100 fell 0.57% to 10608.92; Germany’s DAX dropped 0.84% to 25361.15; France’s CAC 40 declined 0.49% to 8116.76; Italy’s FTSE MIB edged down 0.13% to 51807.40.

Inflation Data and Yields Slam Precious Metals

The latest positioning has clearly turned against precious metals. US August Producer Price Index (PPI) rose 0.4% month-on-month and 5.4% year-on-year, with energy and diesel costs acting as the main drivers of inflation. Weekly initial jobless claims remained low. The European Central Bank (ECB) lifted its benchmark interest rate by 25 bASIs points to 2.50% to tackle energy inflation sparked by the Iran conflict.

At the close, fed funds futures priced in a 71% probability of a 25-bASIs-point Fed rate hike next week. The 10-year US Treasury yield jumped to 4.943%, marking its highest closing level since October 2023. Markets regard Friday’s Consumer Price Index (CPI) release as the last key macro data ahead of the Fed’s September 15–16 meeting. For gold, this set of signals leans bearish: unless CPI cools markedly and weakens rate hike expectations, higher yields and a stronger dollar will keep lifting the opportunity cost of holding gold and silver.

Gold and Silver Break Key Technical Levels

This round of decline in precious metals looks more like a synchronized reaction to inflation and yield shocks rather than a simple unwinding of safe-haven buying. Gold broke below the 200-day EMA reference near $4317.10 and tested the nearby support at $4315.78 within the latest technical range. Silver suffered a steeper drop, sequentially breaking the $67.25–$68.17 retracement zone, the 50% retracement level at $65.60 and the major swing level at $63.31 before stabilizing near $63.50.

Technically, the next bullish target for gold is to reclaim resistance at $4379.38. A sustained breakout would open $4396.30 and then $4500. On the bearish side, a break below $4315.78 will target $4290 and $4263. For silver, bulls need to retake $65.60, with subsequent targets at $67.25 and $68.17. If $63.31 gives way, the next levels are $62.57 and $62.56. Current price action shows gold and silver remain exposed to further pullbacks if Friday’s CPI fails to reverse interest rate expectations.

Strait of Hormuz Developments Continue to Rattle Oil Markets

The Strait of Hormuz remains the critical transmission channel linking crude oil, inflation expectations and defensive demand. Yet on Thursday, its impact on precious metals worked mainly via crude prices and bond yields instead of triggering sustained safe-haven buying of gold. Rising tanker attacks near Hormuz and Houthi forces’ capture of Mokha Port stoked worries over Red Sea shipping safety, sending crude futures to their largest gain in nearly two months.

WTI crude closed up 6.7% at $102.48 per barrel, while Brent crude rose 6.3% to $107.63 per barrel, both hitting their highest closing levels since May 19. The situation remains contradictory for gold: Hormuz risks help support safe-haven demand, but oil back above $100 is pushing up inflation expectations and bond yields, reinforcing the case for another Fed rate hike.

External Markets Strengthen in Tandem

In external markets, Nymex WTI crude traded near $102.48 per barrel and Brent crude around $107.63. The benchmark 10-year US Treasury yield stood close to 4.94%. The US Dollar Index strengthened after the PPI print. Markets are also assessing how much of the dollar’s strength stems from data and how much reflects downward pressure on gold itself.

Overall, the precious metals market is under triple pressure: rising inflation, an oil price shock and climbing yields. Safe-haven buying from geopolitics has temporarily failed to override interest rate expectations. If Friday’s CPI remains hot, gold and silver may struggle to escape weakness. Conversely, a marked cooling in inflation data could trigger repricing of the Fed’s rate path and offer room for a short-term recovery in precious metals.