The marketplace is uneasy to start the month of October, which history shows can be rocky for the stock and financial markets. Geopolitical tensions could be one short-term driver that gets gold steadily above $1,700. Ultimately, the U.S. dollar continues to be strong, but no longer impactfully strong. The outlook hasn't changed. The Fed will continue to raise rates. And we'll have the Bank of England doing pretty aggressive tightening as well.

Gold saw a key technical pattern recently as prices rose from 2.5-year lows and headed towards the $1,720 an ounce level. At the time of writing, December Comex futures were trading at $1,709/oz, up more than 1.3% on the week but down for the sixth month in a row.

Simultaneously, silver surged to its strongest daily percentage gain in 20 months on Monday, propped up by visible signs of the U.S. dollar’s and Treasury yields’ tiredness of their controversial rallies. Front-month Comex gold (XAUUSD) for October delivery closed +1.8% to $1,702.90/oz, while Comex October silver (XAGUSD) finished +8.2% to $20.519/oz, its biggest one-day gain since February 1, 2021.

The two precious metals are most likely eyeing a solid safe-haven bid as the global stock and financial markets remain exceptionally unnerved, as using nuclear weapons became so much of a real threat that prompted world’s richest man, Elon Musk, to initiate his highly prominent peace seeking riff on Twitter, and amid bullish outside markets that see higher crude oil prices and a weaker DXY U.S. dollar index on this day.

All in all, bullion extended its first weekly gain in three, as lower bond rates boosted the appeal of the non-interest bearing asset. Silver actually enjoyed the situation of traders buying back their previously short positions. Nevertheless, speculators continue to abandon the metal at a certain pace, with hedge funds trading the Comex hiking their short bets for the 7th week running as of Tuesday. Could they be wrong?

Gold's near-term direction will largely depend on the employment and inflation data released in the first two weeks of October. Market consensus calls estimate the employment report to show the economy adding 250,000 positions in September and the unemployment rate remaining near 50-year lows at 3.7%.

On top of that, the annual inflation number in the U.S. is expected to come at 8.1% in September after posting 8.3% in August, which even if confirmed will further boost bullion’s anti-inflationary appeal.