Silver (XAG/USD) experienced moderate losses on Thursday, trading at seven-month lows around $57.00 after a sharp 12% sell-off over the previous two days [1]. The decline in silver prices has been driven by rising expectations of Federal Reserve rate hikes later in the year, which have weighed heavily on precious metals this week [1]. Investors are closely watching the upcoming release of the US Personal Consumption Expenditures (PCE) Price Index data, which is expected to confirm these hawkish monetary policy views [1].
Recent upbeat US macroeconomic data, particularly improvements in the labor market and persistent above-target inflation, have prompted Fed officials to adopt a more hawkish stance in recent weeks [1]. As a result, markets are now pricing in a 32% chance of a rate hike at next month's Federal Reserve meeting and a 65% probability of some form of monetary tightening in September [1]. This shift in expectations has led to higher US Treasury yields and a stronger US Dollar, both of which have contributed to the pressure on silver prices [1].
The US PCE Price Index for May is anticipated to show an acceleration to a 4.1% year-on-year rate, marking its highest level in three years [1]. However, these figures are not expected to provide significant support for silver, as they predate the recent decline in crude oil prices [1].
From a technical perspective, XAG/USD is trading at $57.14, maintaining a bearish near-term bias. The intraday Relative Strength Index (RSI) is near oversold levels at 20, while the Moving Average Convergence Divergence (MACD) histogram remains negative but is converging towards the zero level, suggesting that bearish momentum may be waning [1]. Key support levels include the December 4, 2025, low near $56.45, with further support in the mid-$54.00s and at $48.64. On the upside, resistance is expected near $61.40, $67.00, and $71.60 [1].
CONCLUSION
Silver prices have come under significant pressure due to rising expectations of Federal Reserve rate hikes and strong US economic data, pushing XAG/USD to seven-month lows. With markets focused on upcoming US inflation data and technical indicators signaling a stretched downtrend, silver is likely to remain volatile in the near term.