Gold recovery stalls as Saudi refinery attack claims lift crude, silver retreats - Kitco AM Report

(Kitco NewsWire) – Spot gold and silver prices were lower in early U.S. trading Wednesday, as renewed tensions involving Iran and its regional allies pushed crude oil prices higher and reinforced concerns about persistent inflation ahead of the Federal Reserve's interest rate decision. Gold surrendered part of Tuesday's recovery as traders assessed the possibility of additional monetary tightening in December, while silver remained under pressure amid concerns about industrial demand and elevated borrowing costs. Spot gold was trading near $4,054.60 an ounce, down $6.36, or 0.16%, while silver was near $54.202, down $0.195, or 0.40%.Market positioning remains focused on an expected Federal Reserve pause Wednesday, with traders assigning approximately an 84% probability to at least one additional interest rate increase by December. The combination of elevated yields, a firm dollar and persistent expectations for additional Fed tightening continues to limit gold's ability to attract sustained buying interest despite geopolitical uncertainty.The Federal Open Market Committee concludes its two-day meeting Wednesday, with the interest rate decision scheduled for 2 p.m. EDT, followed by Fed Chair Kevin Warsh's news conference at 2:30 p.m. EDT. Policymakers are widely expected to leave the federal funds target range unchanged at 3.75% to 4.00%, shifting attention toward the accompanying statement and the chairman's assessment of inflation, employment and the possibility of another increase in December. Wednesday's remaining economic calendar includes the weekly Energy Information Administration petroleum inventory report at 10:30 a.m. EDT. Thursday brings the advance third-quarter gross domestic product estimate, September personal consumption expenditures inflation figures and weekly initial jobless claims, all scheduled for 8:30 a.m. EDT. Softer inflation readings or less restrictive Fed guidance could reduce December rate hike expectations and support gold through lower Treasury yields and a weaker dollar. Conversely, persistent price pressures and a hawkish policy message would reinforce expectations for additional tightening and maintain pressure on bullion.The Strait of Hormuz and U.S.-Iran situation remains a significant source of volatility in global energy markets, with renewed attacks involving Iranian-aligned Houthi forces threatening the fragile improvement in regional security. The Houthis claimed responsibility Tuesday for a ballistic missile attack on Saudi Arabia's Ras Tanura refinery, a major petroleum processing and export complex with approximately 550,000 barrels per day of refining capacity. Saudi authorities had not immediately confirmed the strike or the extent of any damage, leaving uncertainty about its direct operational consequences. The latest incident followed diplomatic discussions in Tehran involving representatives from Saudi Arabia, Turkey and Pakistan, which had encouraged hopes of reduced regional tensions and helped crude oil prices decline nearly $2.00 a barrel Tuesday. However, negotiations have yet to produce a confirmed settlement between Washington and Tehran, while threats to commercial shipping and energy infrastructure continue to complicate efforts to restore normal operations through the Strait of Hormuz.The renewed security concerns pushed crude oil prices higher Wednesday, reversing much of the previous session's decline. The confrontation remains unresolved despite regional diplomatic initiatives, with continued attacks involving Houthi forces and uncertainty about U.S.-Iran negotiations sustaining a substantial geopolitical risk premium in energy markets. For gold, the possibility of further military escalation supports defensive demand, but higher crude prices also threaten to reinforce inflation and expectations for additional Fed tightening. That competing influence has limited bullion's response to Middle East instability. Silver faces similar monetary policy headwinds, with its industrial exposure adding sensitivity to elevated energy costs and concerns about slowing manufacturing activity.Global equity markets were mixed ahead of the U.S. open as investors positioned for the Federal Reserve decision and quarterly earnings from major technology companies. Tuesday's advance in the Nasdaq and S&P 500 reflected renewed buying interest in artificial intelligence-related shares, although concerns about corporate financing requirements and elevated valuations persisted. Asian markets were mixed, while European investors remained focused on corporate earnings, higher energy costs and upcoming central bank decisions. The European Central Bank and Bank of Japan are also scheduled to announce policy decisions this week. Investors will be particularly sensitive to whether central bank guidance reinforces expectations for prolonged restrictive monetary policy, especially as elevated crude prices continue to threaten corporate margins and consumer purchasing power.The key outside markets see Nymex WTI crude oil prices higher and trading near $101.37 a barrel in overnight market indications, while Brent crude was near $115.59. The yield on the benchmark 10-year U.S. Treasury note is trading near the 5.0% area. The U.S. dollar index is firmer. (Kitco Global Index shows how much of today's gold move is the dollar versus the gold market itself.)Technically, spot gold bulls' next upside price objective is to push prices back above the $4,059.00 to $4,079.00 resistance zone, with a sustained move targeting $4,088.00 and then $4,200.00. Bears' next near-term downside price objective is a break below $4,015.00, with deeper downside targets at $3,975.00 and then $3,936.00. First resistance is seen at $4,059.00 and then at $4,079.00. First support is seen at $4,039.00 and then at $4,015.00.Spot silver bulls' next upside price objective is to drive prices back above the $54.460 to $55.770 resistance zone, with a sustained move targeting $60.000 and then $63.000. The next downside price objective for the bears is a break below $52.410, with deeper downside targets at $51.390 and then $50.000. First resistance is seen at $54.460 and then at $55.770. Next support is seen at $52.410 and then at $51.390.See live precious metals prices for gold, silver, platinum and palladium — in USD, CAD and 12 more currencies.

Gold recovery stalls as Saudi refinery attack claims lift crude, silver retreats - Kitco AM Report

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