Article Summary: During the US session on Aug 4, gold and silver diverged. The US July ISM non-manufacturing PMI missed expectations, but a firmer dollar pressured gold, keeping it volatile around $2,700; silver remained supported by industrial demand. This article reviews the moves, interprets the data impact, and analyzes key variables for the short term.
Wednesday (Aug 4) US session saw clear divergence in precious metals. Spot gold remained volatile around the key psychological level of $2,700/oz, while silver posted modest gains on resilient industrial demand. By the close, spot gold was at $2,698.20/oz, down 0.25% from the previous session; spot silver was at $31.85/oz, up 0.62%. The gold/silver ratio narrowed further to around 84.7, underscoring silver's relative strength.
Services PMI Misses to the Downside, Lending Short-Term Support to Gold
The Institute for Supply Management (ISM) reported its July non-manufacturing PMI fell from 48.8 to 47.5, below the market expectation of 49.0, marking the second consecutive month below the boom-bust line. Following the data, gold briefly jumped more than $10, hitting an intraday high of $2,712.30/oz. Analysts noted that continued contraction in services, a key pillar of the US economy, heightened worries about an economic slowdown and reinforced expectations of two Fed rate cuts this year.
The CME FedWatch tool showed traders pricing a 74% probability of a 25-basis-point cut in September, up from 68% previously, while expectations for another cut in December also firmed. In response, US Treasury yields pulled back temporarily, with the 10-year yield dipping to 4.02%, providing upward momentum for gold.
Dollar Rebounds, Capping Gold's Upside
However, gold's rally did not last. As US trading deepened, the dollar index rebounded from an intraday low near 102.35 to 102.80, recovering most of its earlier losses. A stronger dollar weighed on dollar-denominated gold, which met notable selling pressure near $2,710 and quickly pulled back to the $2,695 area. Some traders noted that large financial institutions took profits above $2,700, curbing further upside.
In addition, a steeper US Treasury yield curve with a wider term spread added negative pressure to gold's zero-yield asset appeal. Despite soft economic data, Fed official Waller spoke after the close, stressing that "policy adjustments require more evidence of sustained inflation declines," a more cautious tone than markets expected, which somewhat reduced bets on aggressive cuts.
Silver Shines Brightly, Industrial Demand Lends Support
Unlike gold's choppiness, silver traded more steadily. It started from $31.55/oz, climbed to an intraday high of $32.10, and finally settled above $31.85. The core driver was industrial demand: global solar installations continued to beat expectations, with China's solar module exports up 23% year-on-year in July, providing strong support for silver consumption. Meanwhile, silver usage in AI servers and electronic components is also rising, further tightening supply-demand balances.
ETF holdings data showed the world's largest silver ETF (SLV) added 62 tonnes on Aug 4, marking a third straight day of net inflows and reflecting institutional optimism on silver. Precious metals analysts noted that silver combines gold's safe-haven appeal with exposure to the industrial upcycle, and may continue to outperform gold in the current macro environment.
Outlook: Key Tests Ahead — Jobs Report and Geopolitics
Looking ahead, the market's focus shifts to Friday's (Aug 6) July non-farm payrolls report. While the latest PMI data reinforced the slowdown narrative, the jobs report will be the decisive factor for the Fed's policy path. If the report is also weak, gold may retest the $2,730 resistance zone; conversely, if jobs prove surprisingly resilient, gold could test support at $2,670.
On geopolitics, Middle East conditions saw subtle shifts. Positive signals from indirect US-Iran talks sent oil prices lower, somewhat reducing gold's safe-haven premium. Still, developments in the Russia-Ukraine conflict and US-China trade policy risks remain closely watched.
Technically, gold holds a daily range of $2,670-$2,730, with moving averages in bullish alignment, but the MACD momentum bars are shortening, suggesting continued high volatility in the near term. Silver appears stable above $31.50; a decisive break above $32.20 could open the path toward $33.
Overall, Aug 4 US session gold and silver moves reveal the core market tension: the battle between economic downside pressure and expectations of tighter dollar liquidity. Ahead of key data, investors should stay flexible, manage positions prudently, and remain alert to unexpected risk events.
