Silver (XAG/USD) rose by 1.8% to near $64.40 during the European trading session on Thursday, driven by a pause in the recent rally in oil prices. This pause followed Saudi Arabia's confirmation that it is exploring alternative energy shipping routes and offering additional crude cargoes to Asian refiners via ship-to-ship transfers off Oman's Sohar port, as reported by The Times of India. These actions are expected to ease concerns about energy supply disruptions that intensified after Saudi Arabia closed its east-west pipeline due to drone attacks [1].
Despite the current gains, the upside for silver is seen as limited due to the Federal Reserve's recent monetary policy decision. The Fed raised interest rates by 25 basis points to a range of 3.75%-4.00%, aiming to combat persistent inflation. The updated dot plot indicates broad support among policymakers for maintaining restrictive monetary policy for an extended period, with no return to a 3.5%-3.75% range anticipated until the end of 2029. NBC Economics strategists noted that the Fed's 4.25% upper bound target could mark the peak of a brief tightening cycle, but they also suggested that risks are skewed toward earlier and more significant rate cuts than the Fed currently signals, depending on the sustainability of economic expansion, particularly the AI boom [1].
From a technical perspective, XAG/USD is trading at $64.38, maintaining a bearish near-term bias as it remains below the 20-day exponential moving average (EMA) at $64.91. The Relative Strength Index (RSI) is at 48.73, just below the neutral 50 line, indicating waning momentum. If silver can reclaim the 20-day EMA, it could extend gains toward $68. Conversely, a decline below Wednesday's low at $62.30 could see the price fall toward $60, and potentially to the July low at $54.77 if downward momentum persists [1].
Theoretically, higher interest rates are negative for non-yielding assets like silver, which may limit further upside in the near term [1].
CONCLUSION
Silver's recent rally to $64.40 is supported by easing energy supply concerns, but further gains may be capped by the Federal Reserve's hawkish stance and higher interest rates. Technical indicators suggest a cautious outlook, with key resistance and support levels in focus. Market participants are watching for signals of potential rate cuts, which could alter the current trajectory.