Silver (XAG/USD) extended its recovery above $67.00 on Friday, marking its second consecutive day of gains after rebounding from lows near $62.00 earlier in the week. This move was supported by a moderate reversal in US Treasury yields, which offset the negative impact of the Federal Reserve’s hawkish rate hike. The Fed raised its benchmark interest rate by 25 basis points to the 3.75-4% band on Wednesday, with Chairman Kevin Warsh reaffirming the central bank’s commitment to fighting inflation and hinting at further monetary tightening ahead. The US benchmark 10-year yield retreated below the critical 5% level, providing a fresh impulse to yieldless precious metals like Silver [1].
Gold (XAU/USD) also rebounded, trading around $4,380, up 0.90% on the day, and is on track for its first weekly gain in three weeks. However, Gold struggled to move above the $4,400 level as the Fed’s hawkish outlook kept the US Dollar firmly bid. The US Dollar Index (DXY) traded around 100.36 near seven-week highs. The Fed’s decision pushed both the US Dollar and Treasury yields higher, initially sending Gold sharply lower, but a pullback in Oil prices helped Gold recover from a more-than-one-month low of $4,235 touched on Wednesday [2].
Technical analysis for Silver indicates momentum has improved, but daily chart indicators remain mixed, with the Relative Strength Index (14) near 56 and the MACD marginally below zero. Bulls need to breach resistance above $68.00, which has capped rallies several times earlier in September, to open the path toward mid-June and late-August highs above $71.00 and the 200-day SMA at $73.18. On the downside, session lows near $65.20 are likely to test bears ahead of the key support area between $62.20 and $63.05 [1].
For Gold, the Fed signaled that additional rate increases could come as policymakers remain committed to bringing inflation back to the 2% target. The updated dot plot shows that 16 of 18 officials expect at least one more rate hike this year, and the median policy-rate forecast stands at 4.1% for both 2026 and 2027, suggesting no rate cuts next year. Traders currently see around a 55% chance of another increase at the October meeting. Energy-related inflation risks persist, with West Texas Intermediate Oil down only around 0.63% near $96.00, and traffic through the Strait of Hormuz remains heavily restricted. These risks are keeping US Treasury yields elevated, with the benchmark 10-year yield trading around 4.96%, up roughly 0.50% on the day and not far from the 2007 high of 5.04% touched earlier this week [2].
A stronger recovery for Gold may require a deeper fall in Oil prices, lower Treasury yields, or a shift in Fed rate expectations. Even so, central-bank buying, strong investment demand, and steady inflows into Gold-backed exchange-traded funds should support the metal over the longer term [2].
CONCLUSION
Both Silver and Gold have rebounded as falling yields provided support, but the Federal Reserve's hawkish outlook and elevated US Dollar continue to limit upside potential. Technical resistance levels and persistent inflation risks suggest that further gains may require a shift in market conditions or Fed policy expectations. Investors should monitor upcoming Fed commentary and market developments for potential catalysts.