Silver (XAG/USD) experienced a sharp decline of 1.75%, trading near $64.85 during the European session on Tuesday, as market participants reacted to signals from Federal Reserve officials that interest rates may remain elevated for an extended period due to persistent inflation risks [1]. Chicago Fed President Austan Goolsbee stated that strong demand, alongside energy, tariff, and other supply shocks, is contributing to inflationary pressures [1]. Minneapolis Fed President Neel Kashkari echoed concerns about high inflation, noting that hot price pressures are not solely driven by elevated oil prices [1].
The CME FedWatch tool currently indicates an almost 90% probability that the Federal Reserve will implement at least one interest rate hike this year, reinforcing the higher-for-longer narrative and weighing on silver prices [1]. Technical analysis shows XAG/USD trading at $64.90, maintaining a bearish near-term outlook as it remains capped by the 20-day EMA at $65.18. The Relative Strength Index (14) is around 50, suggesting neutral momentum that is insufficient to overcome overhead resistance [1]. Initial resistance is identified at the 20-day EMA ($65.18), while the former resistance trend line, now support at $64.26, is the first downside level to monitor. A daily close below this area could trigger further selling pressure [1].
Investors are also awaiting a meeting between US and Gulf nation leaders at the United Nations General Assembly in New York, where discussions are expected to focus on increasing oil supply from the Middle East. This event could have implications for inflation and, consequently, for silver prices, although no immediate market reaction was reported [1].
CONCLUSION
Silver prices have come under significant pressure due to expectations of prolonged high US interest rates, driven by persistent inflation concerns. Technical indicators suggest a bearish outlook, with further downside possible if support levels are breached. The market remains attentive to upcoming geopolitical developments that could influence inflation and precious metal prices.