Silver prices (XAG/USD) rebounded to trade around $63.80 per troy ounce during Asian hours on Thursday, recovering from losses posted the previous day [1]. The uptick in silver was supported by a decline in oil prices, which eased as Saudi Arabia announced plans to restore roughly half the capacity of its East-West pipeline within days and return to full operation within six weeks after recent drone attacks [1]. This pipeline, which bypasses the Strait of Hormuz, had been damaged, but Saudi Arabia has increased crude shipments through the strait with US military assistance in the interim [1].
Despite the short-term support from lower oil prices, silver faces headwinds from US monetary policy. The Federal Reserve raised the federal funds rate by 25 basis points to a target range of 3.75% to 4.00%, marking its first rate hike in three years and signaling another possible increase before year-end [1]. Fed Chair Kevin Warsh stated, 'inflation is too high and has been for too long,' describing the decision as 'sober' and 'responsible,' and indicated further hikes may be necessary to curb inflation [1]. Money markets are pricing in a 49.8% chance of another Fed hike in October, according to the CME FedWatch tool [1].
Technical analysis shows XAG/USD trading at $63.80 with a bearish near-term bias, as the price remains below both the nine- and 50-period Exponential Moving Averages (EMAs) [1]. The 14-day Relative Strength Index (RSI) has eased to 47.3, suggesting a consolidative-to-soft tone rather than outright oversold conditions [1]. Immediate resistance is noted at the nine-period EMA ($64.36) and the 50-period EMA ($64.70), with a sustained break above these levels needed to trigger a stronger bullish phase [1]. On the downside, a drop in RSI toward 40 could signal intensifying bearish pressure [1].
CONCLUSION
Silver prices have found short-term support from easing oil prices but remain under pressure due to the Federal Reserve's rate hike and the prospect of further tightening. Technical indicators suggest a consolidative to bearish outlook unless key resistance levels are breached. Market participants are closely watching Fed policy signals and oil market developments for further direction.