Spot gold and silver recovered slightly late on Thursday after the previous sell-off. The rebound was supported by lower U.S. Treasury yields, a weaker U.S. dollar, and continued market reassessment of geopolitical risks around the Strait of Hormuz.

Gold Recovers Slightly After Sell-Off

At the time of writing, spot gold was trading around $4,027.40 per ounce, up 0.73% on the session. Meanwhile, spot silver rose 0.87% to around $57.80 per ounce.

The recovery came after precious metals had faced strong selling pressure in the previous session. Lower U.S. Treasury yields and a weaker dollar helped ease pressure on non-yielding assets such as gold and silver.

PCE Data Helps Stabilize the Market

U.S. inflation data showed that the May PCE index rose 0.4% month-on-month and 4.1% year-on-year. Meanwhile, core PCE increased 0.3% month-on-month.

Following the data release, the U.S. 10-year Treasury yield fell to around 4.4%, while the 2-year yield traded near 4.12%. This helped stabilize the precious metals market after several sessions of pressure.

Fed Policy Remains a Major Headwind

Although gold and silver rebounded, the Fed’s policy outlook remains a key factor limiting further upside.

At the June 17 meeting, the FOMC kept the federal funds target range unchanged at 3.50% - 3.75%. However, updated projections suggest that the Fed may keep interest rates higher for longer, raising its 2026 median federal funds rate forecast to 3.8%, up from 3.4% in March.

The Fed also raised its 2026 PCE inflation forecast to 3.6%, compared with 2.7% previously. As a result, the rebound in gold and silver appears to be driven mainly by short-covering rather than strong market conviction.

Hormuz Risks Still Support Defensive Demand

Risks around the Strait of Hormuz are no longer creating a one-way shock, but they remain a potential factor for gold, oil, and interest rates.

Brent crude briefly fell to $72.24 per barrel, near pre-conflict levels, after tanker traffic through the strait recovered. However, a later attack on a Singapore-flagged cargo vessel pushed oil prices back up by around 2% and revived some geopolitical demand for gold.

This suggests that the immediate panic premium has eased, but the market still views gold as a hedge against renewed shipping disruptions.

Gold Technical Outlook

From a technical perspective, gold buyers need to push prices above the $4,020 - $4,040 per ounce resistance zone to improve upside momentum.

If gold breaks above this area, the next targets are around $4,180 and $4,200.

On the downside, if prices break below $3,950, short-term selling pressure could extend toward $3,900 and then $3,880.

Silver Technical Outlook

For spot silver, buyers need to push prices back above the $59 per ounce area to strengthen the recovery outlook. If this level is broken, the next upside targets are $61 and $62.

Conversely, if silver breaks below the $56 - $57 support zone, downside pressure could extend toward $52 and then $51.

Conclusion

Gold is holding around the $4,000 per ounce area, supported by lower U.S. yields, a weaker dollar, and lingering geopolitical risks in the Gulf.

However, expectations that the Fed will maintain a tight monetary policy stance for longer remain a major headwind for precious metals. In the short term, investors should monitor gold’s reaction around the $4,020 - $4,040 resistance zone and the $3,950 support level to assess the market’s next direction.

📌 This content is for market information purposes only and does not constitute a trading recommendation.

Source: Kitco