Silver (XAG/USD) struggled to gain ground after sliding to a fresh monthly low of $75.50 during the late Asian trading session on Thursday, reflecting pressure from speculation that the Federal Reserve will maintain interest rates in the current range of 3.50%-3.75% throughout the year [1]. According to the CME FedWatch tool, there is a 57.5% probability that the Fed will either leave the Federal Fund Rate unchanged or hike it from its current levels, which is theoretically favorable for interest-bearing assets and diminishes the appeal of non-yielding assets like silver [1].
As of writing, 10-year US Treasury yields are up 0.42% to near 4.28%, approaching a six-week high, while the US Dollar Index (DXY) is marginally down but remains slightly above 100.00, holding onto Wednesday's gains [1]. A stronger US Dollar makes silver a less attractive risk-reward bet for investors [1]. The Fed's monetary policy outcome on Wednesday intensified speculation of a prolonged rate hold, as the central bank left rates unchanged for the second consecutive time and signaled that monetary easing is not feasible due to inflation risks [1]. Fed Chair Jerome Powell stated, “Inflation remains somewhat elevated, with recent progress slower than hoped,” and described the current policy stance as “appropriate and at the high end of neutral, or mildly restrictive” [1].
Despite the bearish momentum, escalating tensions in the Middle East are expected to limit the downside for silver, as safe-haven assets tend to perform better in geopolitically uncertain environments [1]. Technical analysis indicates a bearish trend for XAG/USD after breaking down from a Descending Triangle chart pattern near $77.50, with the 14-period RSI shifting into the 20.00-40.00 zone, signaling strong bearish momentum [1]. Key support levels are identified at the February 17 low of $72.00 and the February 06 low of $64.17, while resistance emerges at $78.00 and $80.00, with a recovery above $80.00 needed to ease immediate downside pressure and open the way toward the March 12 high of $87.45 [1].
CONCLUSION
Silver prices are under pressure as the Federal Reserve signals an extended pause on interest rates, favoring interest-bearing assets and reducing silver's appeal. However, geopolitical tensions may provide some support for silver as a safe-haven asset. The market remains bearish, with technical indicators pointing to further downside unless resistance levels are breached.