Silver (XAG/USD) is facing resistance at the $65 mark after a strong breakout last week, with buyers struggling to extend gains as traders weigh the Federal Reserve's interest rate outlook and ongoing inflation risks [1]. At the time of writing, Silver trades around $64, with $65 acting as a psychological ceiling [1]. The metal reached its highest level since June 23 last week, following weaker-than-expected US Nonfarm Payrolls (NFP) data, which led traders to scale back expectations for a September Fed rate hike. The CME FedWatch Tool now shows the probability of a rate hike below 50% [1].
Uncertainty surrounding the reopening of the Strait of Hormuz is keeping energy-driven inflation risks in focus, despite Iran and Oman nearing an agreement [1]. Traders are awaiting Wednesday’s US Consumer Price Index (CPI) data, which is expected to be a major catalyst for Silver’s next move. A softer CPI reading could further reduce Fed rate hike bets and support Silver, while hotter inflation could revive expectations for a rate increase [1].
From a technical perspective, Silver is in recovery mode after forming a double-bottom pattern near $55 and reclaiming the 21-day and 50-day Simple Moving Averages (SMAs). Momentum indicators, including an RSI around 61 and a positive, expanding MACD histogram, support a bullish outlook. A daily close above $65 would expose the 100-day SMA near $69, with $75 as the next major hurdle. On the downside, the 50-day SMA near $62 offers initial support, followed by the 21-day SMA around $59. A break below $59 would weaken the recovery and bring the $55 region back into focus [1].
CONCLUSION
Silver’s near-term direction hinges on upcoming US CPI data and the Federal Reserve’s rate outlook, with $65 acting as a key resistance level. Technical indicators suggest bullish momentum, but traders remain cautious amid inflation and geopolitical uncertainties. The market is poised for a potential breakout or pullback depending on Wednesday’s inflation report.