Gold slips below $4,000 as Hormuz tanker attack lifts oil prices

Spot gold and silver prices dropped in early U.S. trading on Friday, with gold near $3,958.80 an ounce, down 1.32%, and silver around $50.08, down 4.06%. The declines followed Thursday’s losses and came as a renewed attack on a commercial tanker in the Strait of Hormuz pushed crude oil prices higher.

The U.S. employment cost index rose 0.8% in the third quarter, matching expectations and easing from 0.9% in the prior quarter. Wages and salaries increased 0.7% versus 0.9% previously, while benefit costs rose 0.9% from 1.0%.

The labor-cost data arrived after third-quarter GDP grew at an annualized 3.4% and personal consumption expenditures inflation rose 0.5% month-over-month, keeping inflation pressures in focus for monetary policy. The Federal Open Market Committee left the federal-funds target range at 3.75%-4.00% on Wednesday, with an 83% probability in futures markets of a December rate hike.

The tanker was hit by explosive devices attached to its hull, authorities said, though responsibility was not yet identified. Crude oil futures responded, with December Brent near $117.15 a barrel and WTI around $103.79, reflecting concerns about Gulf supply disruptions ahead of the November 3 U.S. midterm elections.

"The continued geopolitical tension supports defensive demand for gold, but higher oil prices reinforce expectations that the Federal Reserve may keep policy restrictive," a market analyst noted.

Despite the geopolitical backdrop, gold fell as investors weighed liquidation pressure and the outlook for further rate tightening. Silver fell further, pressured by worries over industrial demand and higher energy costs.

U.S. equity futures were lower before the market open, with the S&P 500 down about 1% and the Nasdaq down 2.3%, as technology stocks reacted to mixed earnings guidance. European markets were mixed and Asian markets mostly declined, reflecting broader risk-off sentiment.

The 10-year Treasury yield slipped to roughly 4.98%, while the U.S. dollar stayed relatively strong, limiting gold’s ability to benefit from the higher oil price environment.