Silver prices (XAG/USD) declined by 0.5% to near $80.00 in late Asian trade on Monday, revisiting a three-week low of around $78.00 during the day [1]. This drop comes amid firm expectations that the Federal Reserve will maintain its current monetary policy, with traders confident the Fed will leave interest rates unchanged in the range of 3.50%-3.75% at its Wednesday announcement, marking the second consecutive meeting with steady borrowing rates [1]. The CME FedWatch tool indicates that a rate cut is unlikely before the October policy meeting [1].
The Fed's prolonged pause after its monetary-easing campaign has reduced demand for non-yielding assets like silver, as higher interest rates make alternative investments more attractive [1]. Additionally, surging oil prices—driven by conflicts in the Middle East involving the US, Iran, and Israel—have heightened consumer inflation expectations, with gasoline prices in the US rising sharply and increasing household burdens [1].
Despite the bearish trend, heightened geopolitical tensions, particularly those involving Iran, are expected to limit further downside for silver prices, as safe-haven assets tend to perform better in uncertain environments [1]. Technical analysis shows XAG/USD trading below the 20-day Exponential Moving Average (EMA) near $84.30, confirming a downside break from recent consolidation. The 14-day Relative Strength Index (RSI) in the 40.00-60.00 range signals a sideways trend, with immediate resistance at $82.00–$83.00 and initial support at the February 20 low of $77.47. Sustained weakness could open the way toward the February 17 low around $72.00, with bears retaining control as long as price remains beneath the $83.00 region and the declining 20-day EMA [1].
CONCLUSION
Silver's decline to a three-week low reflects market expectations that the Fed will keep rates steady, reducing demand for non-yielding assets. While geopolitical tensions may provide some support, technical indicators suggest a bearish bias persists unless resistance levels are breached. Investors should monitor Fed policy and global developments for further direction.