Gold and silver prices rose sharply during the U.S. trading session as private-sector employment data came in below expectations, while the U.S. dollar weakened and Treasury yields declined.

Spot gold jumped 4.11% to around $4,244 per ounce, while silver gained 4.16% to $61.88 per ounce.

Weak Employment Data Supports Precious Metals

The U.S. private sector added only 44,000 jobs in July, below the forecast of 75,000 and sharply lower than June’s revised figure of 95,000.

The employment component of the services sector also fell to 47.4, indicating weaker hiring activity. This reduced expectations that the Federal Reserve would need to raise interest rates aggressively, providing support for gold and silver.

However, markets are still pricing in around a 59% probability of a 25-basis-point rate increase in September.

Lower Treasury Yields and a Weaker Dollar Add Momentum

The U.S. Dollar Index edged lower, while the yield on the 10-year U.S. Treasury fell to around 4.6%. The two-year yield remained near 4.2%.

A weaker dollar and lower real yields increase the appeal of non-yielding assets such as gold and silver.

The Strait of Hormuz Remains a Key Market Variable

Iran and Oman said they had agreed on the coordinates of a proposed shipping route through the Strait of Hormuz, while U.S. officials indicated that an interim agreement could be approaching.

However, disagreements over the naval blockade, control of the shipping route and transit fees remain unresolved. As a result, geopolitical risks have not completely disappeared.

WTI crude settled near $75.22 per barrel, while Brent traded around $79.45 per barrel. Lower oil prices helped ease inflationary pressure and provided additional support for gold.

Conclusion

Gold and silver are being supported by weaker employment data, a softer U.S. dollar, lower Treasury yields and expectations that tensions around the Strait of Hormuz may ease.

However, the next move will still depend on expectations for the Fed’s September meeting and whether geopolitical agreements can be implemented in practice.

This article is intended solely to share market information and analysis. It does not constitute a recommendation to buy or sell.

Source: Kitco