Gold prices edged lower early on Monday, while silver advanced as retreating oil prices and softer Treasury yields offered some relief to precious metals.
Spot gold was trading near $4,146 an ounce, down 0.47%, while spot silver stood at $57.12, up 0.23%.
Investors entered the week weighing competing signals from the economy and financial markets. Strong inflation readings have reinforced concerns about interest rates, while last week’s technology-led equity sell-off has raised questions about financial stability and the sustainability of AI-related investment.
AI-related stocks, however, rebounded on Monday with Nasdaq Composite up over 1% in early trading.
Inflation keeps the Fed in focus
Recent economic releases have painted a challenging picture for policymakers. The September consumer price index (CPI) increased 0.6% month over month and 3.7% annually, while producer prices climbed 1.3% during the month and 6.3% from a year earlier.
Friday’s trade-price data added to the inflation concerns. Import prices rose 1.1% in September, while export prices advanced 2.2%. Industrial production, meanwhile, increased 0.7%, and manufacturing output grew 0.3%, pointing to continued resilience in parts of the economy.
Despite the inflation surprises, expectations for another Federal Reserve rate increase in October have eased. Markets are assigning approximately a 15% probability to a hike at the October 27-28 meeting, leaving an unchanged policy rate as the prevailing expectation.
The outlook for December is different. Futures markets continue to price in an approximately 89% probability of another quarter-point increase, reflecting concerns that inflation could remain elevated.
The benchmark 10-year Treasury yield was near 5.08% , around a four-week low, while the US dollar index was little changed at approximately 101.9. Concerns about AI-sector financing and elevated equity valuations have supported demand for government bonds.
For gold, lower yields can reduce the opportunity cost of holding an asset that pays no interest. However, persistent inflation and expectations of tighter monetary policy could reverse that support if Treasury yields and the dollar strengthen again.
Economic data to watch this week
Several upcoming reports could influence expectations for interest rates and the direction of precious metals.
September housing starts are due Tuesday, followed by weekly jobless claims on Thursday. Preliminary business activity surveys and final October consumer sentiment data are scheduled for Friday.
Weaker employment indicators or declining inflation expectations could support gold by easing pressure on yields and reducing the perceived need for additional tightening. Conversely, resilient economic activity and persistent cost increases could reinforce expectations of a December rate hike, creating another headwind for bullion.
Strait of Hormuz keeps energy risks elevated
Developments involving the Strait of Hormuz and tensions between the United States and Iran remain a major source of uncertainty for energy markets, although the immediate effect on precious metals was less pronounced on Monday.
Oil prices retreated after President Donald Trump temporarily waived certain sanctions and tariffs on Russia, raising expectations that additional Russian fuel supplies could reach global markets.
Iran also reiterated that its proposal to reopen the Strait of Hormuz within seven days remained available. However, negotiations with Washington have stalled over Tehran’s conditions, which include sanctions relief and an end to the blockade of Iranian ports.
The underlying disruption to energy shipments remains substantial. Oil flows through Hormuz averaged approximately 10.17 million barrels per day over the latest seven-day period, around 41% below prewar levels. Alternative export routes have only partly compensated for the shortfall.
Continued attacks on tankers, high insurance costs and unresolved military tensions leave the shipping corridor vulnerable to further disruption.
Brent crude traded near $107.55 a barrel, while West Texas Intermediate (WTI) was around $97.19.
Lower oil prices can ease inflation concerns and reduce pressure on interest-rate expectations, offering indirect support to gold. But renewed disruption in the Gulf could reverse that relief by pushing energy prices higher again.
Silver may benefit from easing rate pressure as well, though concerns about industrial activity leave it exposed to shifts in economic growth expectations.
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