Gold and Silver Markets Experience Mixed Reaction to Fed Decision

The gold and silver markets are experiencing a mixed reaction to recent economic developments. After the Federal Reserve held interest rates steady at 3.50% to 3.75%, investors were left with a hawkish-hold interpretation, rather than a dovish pause. This suggests that rates may still be on the rise in September.

The June PCE data showed headline inflation down 0.1% and up 3.7% from last year, while core PCE rose 0.1% and 3.3% respectively. The initial jobless claims rose to 197,000, indicating a firm labor market that may lead to higher interest rates.

The Strait of Hormuz risk premium has cooled down, but not cleared, as the situation remains uncertain. President Trump called off planned strikes on Iran and said talks would take place, while Iranian officials denied direct negotiations with the US. The immediate read-through is supportive for risk assets and lower for oil-linked inflation expectations.

According to Tim Waterer, chief market analyst at KCM Trade, 'an upbeat but guarded start for the metal' fits Monday's price action, where gold and silver are bid, but neither market has yet forced a break from the consolidation ranges that developed after last week's Fed meeting.