Gold and Silver slide as May inflation data fuels Fed rate anxiety

Spot gold dropped 2.20% to $4,165.90 an ounce, while silver retreated 1.06% to $64.645. The decline followed a Department of Labor report showing the annual CPI rate climbed to 4.2% in May, significantly outpacing the Federal Reserve’s 2% target. With core CPI rising 2.9% year-on-year and energy costs surging by 23.5%, the prospect of prolonged high interest rates continues to strip gold of its traditional safe-haven appeal.

The macro environment remains clouded by conflict, as U.S.-Iran tensions intensify following missile and drone strikes in the Gulf and Jordan. While these events typically bolster precious metals, the current market is prioritizing inflation fears and the benchmark 10-year Treasury yield, which sits near 4.5%. Equity markets are likewise under pressure, with Nasdaq futures sliding 1.6% and the iShares Semiconductor ETF down 3.0% premarket. Analysts suggest that until gold can reclaim the $4,250 resistance zone, the immediate technical trend remains tilted toward the downside, with bears eyeing the $4,103 support level.