Gold prices edge higher, silver sees gains before U.S. PPI release

Gold and Silver Edge Higher Ahead of Key U.S. Inflation Data

Gold prices saw modest gains while silver climbed more sharply in early U.S. trading on Friday, as investors awaited a significant U.S. inflation update. Ongoing geopolitical tensions between the U.S. and Iran contributed to increased demand for safe-haven assets heading into the weekend. As of the latest trade, April gold was up $8.40 at $5,202.30, and March silver had advanced $2.697 to $89.735.

Focus on U.S. Producer Price Index

Market participants are closely watching the release of the U.S. Producer Price Index (PPI) for January, a key measure of inflation that will wrap up both the trading week and month. Expectations are for the PPI to rise by 0.3% month-over-month, a slower pace compared to December’s 0.5% increase. Excluding food and energy, the core PPI is also forecast to climb 0.3%, down from a 0.7% gain in the previous month.

Progress in U.S.-Iran Nuclear Negotiations

Talks between the U.S. and Iran regarding nuclear issues are set to continue next week, following what mediator Oman described as “significant progress” in Switzerland, according to Bloomberg. The discussions will resume at a technical level in Vienna after initial consultations. Oman’s Foreign Minister, Badr Albusaidi, noted that the U.S. is demanding Iran dismantle three major nuclear facilities and agree to a permanent deal without expiration clauses. Iranian officials, however, have stated they will not permit the removal of highly enriched uranium from their country. While U.S. representatives have not commented publicly, they have previously indicated that Iran would need to either export or dilute these uranium stocks.

Block Slashes Workforce and Invests in AI

Jack Dorsey’s technology company, Block, is reducing its staff by approximately 4,000 employees—nearly half its workforce—as it pivots toward artificial intelligence to boost productivity. The company has been restructuring since 2024 amid underperforming stock prices and has invested heavily in AI, including developing an in-house tool called Goose. The layoffs, announced in a shareholder letter, follow ongoing job cuts linked to annual reviews. CFO Amrita Ahuja told Bloomberg, “We’re making bold moves from a position of strength, aiming to accelerate our service for customers.” This development highlights the disruptive impact of AI on the broader economy and financial markets.

Mortgage Rates Drop Below 6%

For the first time since 2022, the average 30-year mortgage rate in the U.S. has dipped below 6%, now standing at 5.98%. This decline could stimulate the upcoming spring housing market. Bloomberg notes that while rates under 6% may slightly improve affordability and encourage hesitant buyers, a more substantial decrease would be needed to fully revitalize the market. Currently, the mortgage payment for a typical home represents about 27% of the median household income, with affordability gradually improving thanks to lower rates, softer home prices, and rising incomes.

Market Overview

Elsewhere, the U.S. dollar index is showing slight weakness, crude oil is trading higher around $66.75 per barrel, and the yield on the 10-year U.S. Treasury note is at 3.99%.

Understanding Gold Pricing

The gold market operates through two main pricing methods: the spot market, which reflects immediate transactions, and the futures market, which sets prices for future delivery. Due to year-end trading strategies, the December gold futures contract is currently the most actively traded on the CME.

Technical Outlook for Gold and Silver

• Gold (April Futures): Bulls are targeting a close above strong resistance at $5,400.00, while bears aim to push prices below key support at $4,854.20. Initial resistance is at this week’s high of $5,269.40, followed by $5,300.00. First support is at this week’s low of $5,109.50, then $5,100.00. Wyckoff Market Rating: 7.0.
• Silver (March Futures): Bulls are looking to close above resistance at $100.00. Bears are focused on breaking support at the February low of $71.815. Resistance levels are at $91.34 and $93.00, with support at $87.00 and this week’s low of $84.56. Wyckoff Market Rating: 6.5.

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