Gold prices edge higher despite stronger dollar and treasury yields

Spot gold and silver prices moved higher ahead of the North American market open on Friday.

Precious metals steadied after Thursday’s selloff.

Traders assessed a stronger signal from the US labor market.

They also weighed the European Central Bank’s decision to hold interest rates, elevated crude oil prices and firm US Treasury yields.

At the time of writing, spot gold was trading near $4,055.00 an ounce.

The metal was up 0.16% on the session.

Spot silver was near $58.31 an ounce.

Silver was gaining 1.35%.

Gold traded in an early range of $4,021.20 to $4,064.90.

The metal remained above Thursday’s lows.

However, it was still below the $4,067 and $4,139 resistance levels identified in the latest technical setup.

Silver traded between $56.98 and $58.76 during the early session.

The metal recovered above its 50-period moving average near $58.22.

However, it remained below the $58.56 to $59.94 resistance area.

Strong US labour data limits dovish expectations

Market positioning after the latest major economic data remained less dovish than softer consumer and producer inflation readings had initially suggested.

The European Central Bank kept its deposit rate unchanged at 2.25%.

The main refinancing rate remained at 2.40%.

The marginal lending rate was held at 2.65%.

The ECB also continued to focus on the intensity and duration of the energy-price shock.

In the United States, initial jobless claims fell by 22,000 to 187,000 for the week ended July 18.

The figure marked the lowest level since September 1969.

The previous week’s reading was revised higher to 209,000.

The latest data reinforced the view that layoffs remain historically low.

The 10-year Treasury yield was near 4.70%.

The US dollar index, or DXY, was near 101.39.

Gold continued to receive support from geopolitical risks.

However, firm Treasury yields and a stronger dollar limited the metal’s upside.

Hormuz tensions keep energy risk elevated

The situation around the Strait of Hormuz remained highly stressed.

Transit through the waterway was described as open but under active military and shipping pressure.

It was not viewed as a normalized operating environment.

US-Iran tensions remained focused on control of the waterway.

Meanwhile, Houthi attacks on Saudi tankers in the Red Sea expanded shipping risks and complicated Gulf export routes.

Brent crude oil prices eased to roughly $97.67 a barrel.

The benchmark had previously climbed above $102.

US crude traded near $89.76.

The decline from recent highs did not remove the energy-risk premium from markets.

For gold, the impact of the geopolitical situation remained mixed.

Geopolitical risks supported defensive demand for the precious metal.

However, elevated oil prices also kept inflation risks higher.

Higher inflation concerns can support Treasury yields.

Market participants are now watching several developments.

These include Federal Reserve communication ahead of the July 29 policy decision.

Together, these factors left gold and silver higher on Friday.