Silver (XAG/USD) traded flat around $73.70 during the European session on Friday, consolidating as investors awaited further clarity on the United States interest rate outlook. The Federal Reserve, in its recent policy meeting, left interest rates unchanged in the range of 3.50%-3.75%, a decision that saw four members of the rate-setting committee dissent, with three advocating for a move away from the easing bias. According to the CME FedWatch tool, the market currently expects the Fed to maintain rates at these levels through year-end [1].
The Fed's decision to keep rates steady for longer is theoretically limiting the upside for non-yielding assets like silver. Additionally, global inflation expectations have become de-anchored due to higher energy prices, particularly following the prolonged closure of the Strait of Hormuz, which has driven WTI oil prices 0.5% higher above $103. This scenario is discouraging central banks from easing monetary conditions and is likely to keep silver prices under pressure [1].
From a technical perspective, XAG/USD remains below the 20-period Exponential Moving Average (EMA) at $75.38, maintaining a near-term bearish bias. The Relative Strength Index (RSI) stands at 44.48, indicating persistent selling pressure that is not yet extreme. Immediate resistance is at the 20-period EMA ($75.38), with a sustained close above this level needed to shift the tone more constructively towards $80.00. On the downside, a break below the April 29 low of $70.86 could open the path to the April 7 low of $68.28 [1].
CONCLUSION
Silver prices are consolidating below key technical resistance as the Federal Reserve signals a prolonged pause in interest rates. Persistent inflation concerns and elevated energy prices are likely to keep the metal under pressure in the near term. Market participants are closely watching for further guidance from Fed officials to determine the next directional move.