Silver (XAG/USD) rose by 1.8% to trade near $64.80 during the European session on Wednesday, ahead of the Federal Reserve’s monetary policy announcement scheduled for 18:00 GMT. The CME FedWatch tool indicates that traders are increasingly confident the Fed will raise interest rates by 25 basis points to a range of 3.75%-4.00%, a sentiment reinforced by the persistently high US Consumer Price Index (CPI) report for August released last week [1].
Market participants are closely watching the Fed’s policy statement and the subsequent press conference by Fed Chair Kevin Warsh, who has previously stated that providing forward guidance on interest rates is not appropriate under current circumstances [1]. The CME tool also suggests there is nearly a 79% probability that the Fed will implement at least two rate hikes by year-end. Higher interest rates typically support US Treasury yields, which in turn reduce the appeal of non-yielding assets like silver [1].
At the time of reporting, the 10-year US Treasury yield was marginally lower at around 5%, just below its 19-year high of approximately 5.04% reached on Tuesday [1]. Technically, silver maintains a mildly bearish near-term bias, trading below its 20-day Exponential Moving Average (EMA) at $65.12. The Relative Strength Index (RSI) is around 49, indicating fading momentum and a lack of decisive buying pressure. A daily close above the 20-day EMA would be required to ease downside pressure, while a break below the underlying upward support trend line from the $62 low could expose silver to further losses toward the lower $60 area [1].
CONCLUSION
Silver prices have climbed ahead of the Fed’s anticipated rate hike, but technical indicators suggest a lack of strong buying momentum. The market’s next move will likely depend on the Fed’s policy statement and Chair Warsh’s comments, with further rate hikes potentially weighing on silver’s appeal.