Silver (XAG/USD) and Gold (XAU/USD) prices both edged higher during Friday's European trading session as the US Dollar Index (DXY) and US Treasury yields paused after a strong rally earlier in the week [1][2]. Silver rose 1.85% to near $65.00, while Gold traded around $4,310 after rebounding from a one-week low of $4,244 on Thursday [1][2]. The US Dollar Index was reported at 101.05 by one source and around 101 by another, having reached a two-month high of 101.40 on Thursday [1][2]. The 10-year US Treasury yield corrected from a 19-year high of 5.22% to near 5.15% according to one source, while another cited it holding near 5.17% after peaking at 5.22%, its highest since 2007 [1][2].
The pause in the US Dollar and yields provided temporary support for precious metals, as lower yields and a weaker Dollar typically enhance the appeal of non-yielding assets like Silver and Gold [1][2]. However, both articles emphasize that the broader outlook remains bearish due to persistent expectations of further Federal Reserve interest rate hikes [1][2]. The Fed recently raised rates by 25 basis points to a range of 3.75%-4.00%, and 16 of 18 policymakers anticipate at least one more increase this year [2]. The CME FedWatch Tool indicates a 71% probability of another hike at the October meeting [2].
Fed officials reinforced the hawkish stance, with Governor Michael Barr stating that "further policy adjustments are likely to be needed to ensure inflation comes down to target in a timely fashion" [1]. New York Fed President John Williams noted the US economy's "remarkable resilience" and said "another rate hike may be appropriate by the end of the year" [1][2]. Richmond Fed President Tom Barkin highlighted that inflation pressures are spreading beyond energy and tariff-related shocks [2]. Strategists at Brown Brothers Harriman argue that these comments strengthen the case for additional rate hikes, supporting continued Dollar strength [1].
Technical analysis for Silver shows XAG/USD trading at $65, close to the 20-period EMA at $65.15, with the Relative Strength Index at 50.03, indicating a neutral bias and potential for further consolidation [1]. Key resistance is at $65.15, with support at $62.30 [1]. For Gold, XAU/USD hovers above the Bollinger middle band on the 4-hour chart, but the overall trend remains bearish and a weekly loss is still likely [2].
Other factors influencing the market include higher Oil prices due to the Middle East conflict, which are adding to inflation pressures and complicating the Fed's efforts to reach its 2% inflation target [2]. Upcoming US economic data, including the University of Michigan Consumer Sentiment Index, PCE inflation, ISM Manufacturing PMI, and Nonfarm Payrolls, are expected to play a significant role in shaping expectations for the Fed's next move [2].
CONCLUSION
Silver and Gold prices saw a modest rebound as the US Dollar and Treasury yields paused, but the overall sentiment remains cautious due to ongoing expectations of further Fed rate hikes. Technical indicators suggest limited upside for both metals, with key resistance levels yet to be breached. Upcoming US economic data and continued Fed hawkishness are likely to drive future market direction.