Gold slips below $3,900 as tech sell-off fuels precious-metal liquidation

Spot gold and silver prices dropped sharply in late U.S. trading on Friday, with gold near $3,879.90 an ounce, down 3.5%, and silver around $49.02, down 6.1%. The decline came as a technology-led equity sell-off intensified liquidation pressure on precious metals, offsetting the usual support from falling Treasury yields and heightened geopolitical uncertainty.

U.S. economic reports showed mixed signals: the employment cost index rose 0.8% in Q3, matching expectations, while the October Chicago purchasing managers' index fell to 55.3, missing forecasts but staying above the 50-point expansion threshold. These softer readings followed a stronger-than-expected Q3 GDP report that showed 3.4% annualized growth and a rise in headline PCE inflation to 3.6%.

The Federal Reserve kept its benchmark rate unchanged at 3.75%-4.00% on Wednesday, with two policymakers favoring a 25-basis-point hike. Interest-rate futures still priced in further tightening in December, but the recent dip in employment costs and the equity market decline provided some counterbalance.

Treasury yields fell, with the 10-year note near 4.93% and the two-year near 4.58%, as investors moved into government bonds. Nonetheless, gold continued to slide, suggesting that forced liquidation and expectations of continued restrictive monetary policy outweighed safe-haven demand.

Energy-market uncertainty rose after another commercial tanker was attacked in the Strait of Hormuz, where explosive devices were attached to the hull by a small boat. Responsibility for the attack has not been established, and the incident heightened concerns about possible renewed disruptions to Middle-Eastern oil supplies.

Crude oil futures climbed more than 2%, with December Brent settling at $117.64 a barrel and WTI at $104.12, their highest levels since late April. Higher oil prices fed inflation worries and reinforced expectations that the Federal Reserve will maintain a tight policy stance.

The broader market sold off across regions. In North America, the Dow Jones fell about 1.1% to 51,770, the S&P 500 dropped 1.8% to 7,580, and the Nasdaq slipped 2.9% to around 25,437, led by steep losses in semiconductor and technology stocks. Intel shares plunged nearly 29% after weak profit guidance, and concerns over Amazon’s capital spending added pressure.

European markets also closed lower, with the pan-European Stoxx 600 down roughly 0.4% and the Euro Stoxx 50 falling about 1.2%, as technology shares weakened and higher oil prices raised inflation concerns.

Technical analysts note that gold bulls aim to retake the $3,890-$3,910 resistance zone, while bears target support near $3,780-$3,800. For silver, the next resistance lies at $51-$52, with downside support around $49.

"The latest Hormuz attack reinforced underlying geopolitical demand for gold, but higher crude prices also heightened the risk that inflation will remain persistent and the Federal Reserve will maintain restrictive monetary policy," the report said.

Overall, the combination of equity-market liquidation, rising oil prices, and mixed economic data drove precious-metal prices lower despite falling Treasury yields.