Silver (XAG/USD) experienced a sharp decline of nearly 6.5%, dropping to around $70 during the European trading session on Thursday, as traders reacted to signals from the Federal Reserve indicating an extended pause in interest rate cuts [1]. The CME FedWatch tool shows that the probability of the Fed keeping the Federal Fund Rate unchanged in the 3.50%-3.75% range or hiking it in December stands at 57.5% [1]. This sentiment was reinforced after the Fed's monetary policy outcome on Wednesday, where officials stated that policy adjustments would only be considered if inflation moves toward the 2% target. Fed Chair Jerome Powell emphasized, "If inflation progress stalls, rate cuts will not follow," following the Fed's decision to leave rates unchanged for the second consecutive meeting [1].
Despite ongoing conflicts in the Middle East, silver has not benefited from safe-haven demand. US President Donald Trump issued warnings regarding the South Pars gas field and Iran, but these geopolitical tensions have not provided support to silver prices [1].
From a technical perspective, XAG/USD has extended its losing streak for the third consecutive day, plunging to near $70.40. The price is now well below the 20-day Exponential Moving Average (EMA) at $81.90, indicating strong bearish momentum. The 14-day Relative Strength Index (RSI) has dropped to 34.00, its lowest in 11 months, suggesting further negative momentum ahead [1]. Key support levels are identified at the February low of $64.00 and the round number of $60.00, while resistance is seen at $75.00 and the 20-day EMA at $81.90 [1].
CONCLUSION
Silver's steep decline reflects heightened bearish sentiment driven by expectations of prolonged high US interest rates and lack of safe-haven demand despite geopolitical tensions. Technical indicators point to further downside risk, with key support levels yet to be tested. The market is likely to remain under pressure unless inflation trends shift or geopolitical factors begin to influence safe-haven flows.