Silver (XAG/USD), meanwhile, held firmer, trading at $37.24 after touching an intraday high of $37.26. The white metal continues to benefit from robust industrial demand and remains supported by persistent safe-haven flows, particularly as rate expectations soften.

Fed Policy Outlook Takes Center Stage Amid Weak Data

Traders are focused on the Fed’s policy announcement later today, especially after a string of disappointing economic releases. U.S. retail sales dropped 0.9% month-over-month in May, while industrial production contracted 0.2%, marking its second decline in three months. Year-over-year retail sales slowed to 3.3%, down from April’s 5.0%.

According to the CME FedWatch Tool, markets are now pricing in roughly 44 basis points of rate cuts by the end of 2025. The 10-year U.S. Treasury yield fell to 4.403%, while real yields dropped five basis points to 2.103%, reflecting growing expectations of monetary easing.

Central Banks Remain Bullish on Gold Reserves

In the longer term, gold remains supported by structural demand. The World Gold Council’s latest survey revealed that 95% of central banks plan to increase their gold reserves within the next 12 months. This trend reinforces a stable demand floor for bullion, especially as global interest in de-dollarization grows.

Additionally, despite the short-term headwinds, analysts at Goldman Sachs reaffirmed their forecast for gold to reach $3,700/oz by year-end and $4,000 by mid-2026, driven by central bank buying and lower real interest rates.

As the Federal Reserve prepares to signal its outlook, investors are bracing for volatility. But for now, gold and silver continue to walk the fine line between policy signals and geopolitical noise.