Silver price rebounds after in-line US PCE data eases Dollar support

Silver (XAG/USD) rebounds on Thursday, trading around $58.65 at the time of writing, up 2.16% on the day. The precious metal recovers part of its steep losses from recent days, supported by a modest pullback in the US Dollar (USD) following the release of US inflation data that broadly matched market expectations.

The Bureau of Economic Analysis reported that the Personal Consumption Expenditures (PCE) Price Index rose 4.1% YoY in May, in line with expectations, up from 3.8% in April. The core PCE Price Index, the Federal Reserve's (Fed) preferred inflation gauge, accelerated to 3.4% YoY from 3.3%, also matching forecasts. On a monthly basis, headline PCE increased 0.4%, while core PCE remained unchanged at 0.3%.

Investors mainly focused on the lack of any major upside surprise in core inflation, prompting a modest decline in the US Dollar. The US Dollar Index (DXY) falls 0.24% to 101.30, providing support for Dollar-denominated precious metals.

Other US data released on Thursday continue to point to a resilient economy. Durable Goods Orders declined 4.5% in May, in line with expectations, while Initial Jobless Claims fell to 215K, below forecasts of 225K. Meanwhile, both Personal Income and Personal Spending increased 0.7% in May, exceeding market expectations.

Against this backdrop, markets continue to expect the Fed to maintain a restrictive monetary policy stance, although the chance of a rate hike in September eased slightly following the inflation report. This environment may continue to limit Silver's recovery potential despite Thursday's rebound.