Spot gold and silver prices moved slightly lower after the North American trading session, as investors remained cautious ahead of the Federal Reserve’s meeting minutes and developments surrounding the Strait of Hormuz.

At the time of writing, spot gold was trading around $4,161.90 per ounce, down 0.29%. Spot silver was near $61.90 per ounce, down 0.59% for the session.

Gold Futures Still Hold Gains

Although spot prices weakened, gold futures still ended the session at their highest level since June 22. The nearest-month gold futures contract rose 1.0% to $4,155.10 per ounce, while silver futures gained 2.1% to $61.92 per ounce, marking a fourth consecutive higher close.

However, the recovery has not been fully convincing. According to Rhona O’Connell, market analyst at StoneX, gold ETFs have still not received strong support, suggesting that buying momentum in the market remains limited.

The Fed Remains the Main Source of Pressure

The Fed’s June 16-17 meeting remains a key policy anchor for precious metals. The FOMC voted to keep its target interest rate unchanged at 3.50% - 3.75%, while also emphasizing that inflation remains above the 2% target.

Weaker-than-expected U.S. labor data and lower crude oil prices have helped ease near-term rate hike pressure. However, the market is still not convinced that the Fed will shift clearly toward a more dovish stance.

According to analysts at TD Securities, short positions in precious metals remain “very difficult to reverse.” CTA funds are still holding net short positions, even after the rebound in metals prices, weaker-than-expected employment data, and reduced expectations for Fed rate hikes.

The FOMC meeting minutes, due on Wednesday, will be the next major policy test for the market.

Hormuz Risk Remains, but It Is Not Enough to Drive Gold Sharply Higher

The Strait of Hormuz remains a geopolitical risk factor to watch, but its impact on gold is no longer one-directional. Iran’s military has required oil tankers to use approved routes through the strait and warned of a strong response if there is U.S. intervention.

However, crude oil prices are now trading near pre-conflict levels as flows through the strait resume, OPEC+ supply increases, and Saudi Arabia cuts selling prices. WTI fell 0.2% to $68.55 per barrel, while Brent declined 0.2% to $71.99 per barrel.

As a result, safe-haven demand for gold has not become strong enough to drive a sustained rally, even though geopolitical risks have not disappeared.

U.S. Data Is Not Weak Enough to Pull Yields Sharply Lower

U.S. economic data has not been weak enough to trigger a clear reversal in the dollar and Treasury yields. The ISM Services PMI came in at 54.0 in June, with business activity at 55.4, new orders at 55.1, and employment at 51.2.

The U.S. Dollar Index was nearly unchanged or slightly higher, while the benchmark 10-year U.S. Treasury yield remained near 4.5%, with the latest reading around 4.48%.

This continues to pressure gold and silver, as a high-rate environment increases the opportunity cost of holding precious metals.

Technical Outlook for Gold and Silver

For spot gold, the nearest resistance levels to watch are $4,200 and $4,260. If prices break above the $4,260 - $4,400 resistance zone, buyers may target higher levels around $4,500 and then $5,000.

On the downside, gold’s nearest support levels are $4,091 and $4,000. If these levels are broken, selling pressure could increase toward the $3,900 area.

For spot silver, near-term resistance is seen at $62.43 and $63.32. If silver breaks above the $64.00 - $72.00 zone, the uptrend could strengthen further. On the downside, key support levels to watch are $60.75 and $57.12.

Conclusion

Gold and silver remain under pressure as markets continue to price in the possibility that the Fed will keep interest rates higher for longer. Although weaker labor data and geopolitical risks around the Strait of Hormuz provide some support for precious metals, these factors have not yet been strong enough to create a sustainable rally.

In the short term, the FOMC meeting minutes, movements in the U.S. dollar, U.S. Treasury yields, and developments around Hormuz will remain the key drivers for gold and silver.

Source: Reuters