Silver Price Forecast: XAG/USD plummets to near $63.60 after Fed Williams’ hawkish remarks
- Silver price plunges to near $63.60 as Fed Williams signals more interest rate hikes this year.
- Fed’s Willams warn that high inflationary pressures is a big challenge for the central bank.
- US Treasury Yields have rallied further to 5.14%.
Silver price (XAG/USD) is down 1.25% to near $63.60 during the European trading session on Thursday. The white metal faces intense selling pressure after hawkish remarks from New York Federal Reserve (Fed) Bank John Willams, a permanent voting member, in the European trade.
The comments from Fed’s Williams signaled that the central bank is highly worried about rising inflationary pressures and is gaining confidence on the overall job outlook.
Regarding the United States (US) interest rate outlook, Fed’s Williams said that it is “reasonable to see another rate hike by end of year.”
Williams flags resilience and inflation challenge as Fed keeps hawkish bias
Fed’s Williams delivers a notably firm message, with a 7.2/10 FXS Speechtracker score standing above the 6.2/10 historical average, underscoring confidence in US economic resilience and reduced downside risks to maximum employment. The emphasis that the “big challenge is on inflation,” the acknowledgement of “pretty strong demand from AI,” and the remark that another rate hike by year-end is “reasonable” all point to a stance that keeps the door open to further tightening even as explicit forward guidance is dialed back.
The FXS Fed Sentiment Index slipped by 0.18 points to 148.63, indicating a modest pullback in perceived hawkishness. Despite the decline, the index remains firmly in hawkish territory well above the 100 neutral line, signaling that the Fed’s overall tone continues to support the Dollar even as markets question the durability of higher yields.
The Silver price was already under pressure as United States (US) Treasury Yields have rallied on fresh acceleration in Federal Reserve (Fed) interest rate hike expectations.
According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in all two policy meetings remaining this year have increased to 55% from 42.3% seen on Tuesday.
Following remarks from Fed’s Williams, 10-year US Treasury Yields have extended their rally to near 5.14%, the highest level seen in over 19 years. Higher yields on interest-bearing securities result in a erosion in appeal of non-yielding assets, such as Silver.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $63.79, keeping a bearish near-term tone as it holds below the 20-day exponential moving average (EMA) at $65.15. The metal has retreated from recent highs and the price location beneath this key dynamic barrier suggests rallies are likely to be capped unless buyers can reclaim the EMA, while the Relative Strength Index (RSI) at 46.18 hints at only modest downside momentum rather than outright oversold conditions.
On the topside, immediate resistance is defined by the 20-day EMA at $65.15, where a daily close above would ease the current pressure and open the way for a more constructive recovery. On the downside, the August 19 low at $62.19 is the key support level.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.