Both Gold (XAU/USD) and Silver (XAG/USD) prices retreated sharply on Thursday as the US Dollar surged to new year-to-date (YTD) highs, following a hawkish tilt from the Federal Reserve. The Fed's updated economic projections revealed that nearly half of board members support rate hikes in 2026, and 9 of 19 policymakers anticipate a rate increase by the end of the year, which has significantly strengthened the Greenback and weighed on precious metals prices [1][2].
Silver fell by nearly 2%, trading at $66.07 after dropping from daily highs of $69.85. The white metal had previously extended losses to $61.50 last week before a partial recovery, but sellers remain in control, as indicated by a bearish Relative Strength Index (RSI). Key technical levels for Silver include support at $65.77 (Thursday's daily low), $63.32 (June 10 low), and $61.50 (June 11 cycle low). Resistance lies at $68.00, with further upside potential towards the 200-day SMA at $68.99 and the psychological $70.00 mark if buyers regain momentum [1].
Gold prices also declined, falling by 0.70% to $4,223 after reaching a high of $4,330. The yellow metal broke below the June 16 support of $4,306 and touched a two-day low of $4,219 before a modest rebound. The RSI for Gold is also in bearish territory, suggesting sellers are dominant. If Gold falls below $4,200, it could test the June 11 swing low at $4,023, with the $4,000 level as the next major support [2].
The market reaction was pronounced, with the US Dollar Index (DXY) rising to 100.81, its highest level since May 2025. Market participants are now pricing in an 85% chance of a US rate hike in December, up from 61% before the Fed's statement. The Fed's median forecast projects inflation declining to 3.6% in 2026 and reaching the 2% target by 2028, with GDP growth expected at 2.2% by year-end and unemployment remaining steady [2].
On the data front, US Initial Jobless Claims decreased from 230K to 226K, slightly above estimates but still reflecting a strong labor market. The upcoming US economic calendar is light due to the Juneteenth holiday, with key data releases scheduled for the following week, including Flash PMIs, jobs data, Q1 2026 GDP, and the Core PCE Price Index [2].
CONCLUSION
The Federal Reserve's hawkish outlook has driven the US Dollar to new highs, resulting in significant declines for both Gold and Silver prices. Technical indicators for both metals remain bearish, and market expectations for further rate hikes have increased. Investors are likely to remain cautious as the Fed's policy stance continues to weigh on precious metals.