Silver (XAG/USD) advanced toward $68.10 on Thursday, rising 1.05% on the day, supported by positive developments in negotiations between the United States and Iran, specifically a memorandum of understanding signed by US President Donald Trump and Iranian President Masoud Pezeshkian to end hostilities and reopen the Strait of Hormuz [1]. This diplomatic breakthrough contributed to lower oil prices, reducing concerns about energy-driven inflation and improving overall market sentiment [1]. Gold (XAU/USD) also showed marginal gains on Thursday, trading at $4,269 but remained close to weekly lows at $4,220, as hopes of a peace deal in Iran initially fueled a recovery [2].
However, both precious metals faced headwinds from the Federal Reserve's latest monetary policy decision. The Fed, under new Chair Kevin Warsh, left its benchmark interest rate unchanged at its June meeting but adopted a hawkish tone by removing references to a dovish bias and raising its interest rate projections for year-end [1][2]. The Fed's statement emphasized a commitment to bringing inflation down to the 2% target and noted improvements in economic activity and the labor market [2]. Nine of the 19 board members expect at least one rate hike in 2026, and futures markets have increased bets for a rate hike in October, supporting US Treasury yields and the US Dollar [2].
A stronger US Dollar and higher Treasury yields tend to limit the appeal of non-yielding assets such as Silver and Gold, as a stronger Greenback reduces purchasing power for international investors and weighs on demand for precious metals [1][2]. Despite these monetary headwinds, Silver continues to benefit from its dual role as a precious and industrial metal, while Gold remains supported by its safe-haven status, though both metals are currently constrained by the Fed's hawkish outlook [1][2].
Technical analysis for Gold indicates that XAU/USD remains in a broader bearish tone below $4,300, with momentum indicators such as the RSI just above 40 and the MACD marginally negative, suggesting that downside momentum has eased but not reversed [2]. Key resistance levels for Gold are noted at $4,370, $4,400, and $4,464, while support is seen at $4,220, $4,023, and $3,886 [2]. Investors are now focused on upcoming US economic data, including the Philadelphia Fed Manufacturing Index and Weekly Initial Jobless Claims, which could influence monetary policy expectations and drive further moves in both the US Dollar and precious metals [1].
CONCLUSION
Silver and Gold prices initially benefited from the US-Iran agreement, but gains were capped by the Federal Reserve's hawkish stance and expectations of further rate hikes. The market remains cautious, with precious metals under pressure from a stronger US Dollar and higher Treasury yields. Upcoming US economic data will be closely watched for further direction.