Silver (XAG/USD) rebounded after three consecutive days of losses, trading around $60.10 per troy ounce during Asian hours on Friday [1]. The rally was supported by a decline in oil prices, which helped ease inflationary concerns and reduced expectations for imminent Federal Reserve rate hikes [1]. This shift in sentiment followed statements from US President Donald Trump, who announced on social media that the US was engaged in 'productive discussions' with Iran and would refrain from attacking the country before the midterm elections, contributing to the drop in oil prices [1].
Market expectations for a 25 basis point rate hike at the upcoming Federal Reserve policy meeting fell to nearly 17.7%, down from 38% a week earlier, according to the CME FedWatch tool [1]. However, the probability of a hike at the Fed's December meeting remains high at 83% [1]. Despite the easing of immediate rate hike fears, Federal Reserve officials maintained a hawkish tone. Fed’s Musalem delivered a message emphasizing that 'more monetary policy firming will be required' to bring inflation back to 2%, citing strong economic and labor market conditions, persistent demand pressures, and structurally higher real rates driven by strong capital demand and AI-related investment [1].
The FXS FedSentiment Index slipped by 0.25 points to 138.33, indicating a modest pullback in perceived hawkishness, though it remains well above the neutral threshold of 100, signaling a continued bias toward further tightening [1]. Fed’s Waller also delivered a distinctly hawkish message, scoring 8/10 on the FXS Speechtracker, and reinforced expectations for tighter policy, noting that 'more hikes [are] needed' but not necessarily at consecutive meetings [1]. Waller highlighted persistent inflationary forces from AI investment and energy shocks, as well as a strengthening economy and solid labor market, expressing concern that inflation has been above target for nearly 5-1/2 years [1].
Technically, XAG/USD trades at $60.10, maintaining a bearish near-term bias as the spot price remains under both the short-term and medium-term Exponential Moving Averages (EMAs) [1].
CONCLUSION
Silver prices rose above $60.00 per ounce as easing inflation fears and reduced Fed rate hike expectations supported the metal. However, Federal Reserve officials maintained a hawkish stance, signaling the potential for further tightening. Market sentiment remains cautious, with technical indicators suggesting a bearish near-term outlook for XAG/USD.