Both Gold (XAU/USD) and Silver (XAG/USD) steadied on Friday following the release of US Personal Consumption Expenditures (PCE) inflation data, which showed headline PCE rising 0.4% month-over-month in May, unchanged from April and below the 0.5% forecast. Core PCE held steady at 0.3%, matching expectations. These softer monthly inflation readings led traders to scale back expectations for a near-term Federal Reserve (Fed) rate hike, with the probability of a September hike falling to 61% from 70% a week ago, according to the CME FedWatch Tool [1][2].
At the time of writing, Silver trades around $58.12, set to end the month nearly 20% lower after hitting a more than six-month low earlier this week [1]. Gold trades around $4,050, up 0.6% on the day, but remains on track for a fourth consecutive monthly decline [2]. Despite the stabilization, both metals lack strong upside momentum as annual inflation remains well above the Fed's 2% target, reinforcing expectations that monetary policy will remain restrictive for longer. Chair Kevin Warsh echoed the need to restore price stability at this month's policy meeting [1].
Technical analysis for Silver shows XAG/USD remains in a bearish phase, holding below the 100-day SMA at $75.97 and the 200-day SMA at $69.56. The RSI sits in oversold territory near 30, and the ADX above 30 indicates the prevailing downtrend retains firmness. Immediate support is at $55.00, with a deeper floor near $50.00, while resistance levels are at $60.00, $69.56, and $75.97 [1]. Gold's technicals reveal a bearish near-term bias, with XAU/USD below the 20-period Bollinger SMA at $4,247. The RSI at 34 hovers just above oversold territory, and the ADX at 41 signals a strong, persistent downtrend. Resistance is at $4,247 and $4,544, while support is at $4,000 and $3,951 [2].
Market implications include continued pressure on both metals due to prospects for higher US interest rates. The US Dollar Index (DXY) trades around 101.20 after hitting a more than one-year high near 101.80 earlier this week, making Gold more expensive for overseas buyers [2]. Geopolitical uncertainty, particularly regarding US-Iran relations and the Strait of Hormuz, adds to market caution [2]. Unless markets meaningfully scale back expectations for Fed rate hikes, Silver's bearish technical outlook is likely to keep upside attempts in check [1]. Similarly, Gold may struggle to stage a meaningful recovery as prospects for higher US interest rates continue to weigh on the non-yielding metal [2].
CONCLUSION
Gold and Silver have stabilized following softer US PCE inflation data, which reduced near-term Fed rate-hike bets. However, both metals remain under strong bearish pressure, with technical indicators signaling persistent downtrends and limited upside potential. The market takeaway is that restrictive monetary policy and elevated inflation are likely to keep precious metals subdued in the near term.