Silver Price Outlook: XAG/USD plunges to $70 amid expectations that the Fed will maintain current interest rates throughout the year

Silver Price Drops Sharply Amid Fed Policy Expectations

The price of silver (XAG/USD) tumbled by nearly 6.5%, falling close to $70 during Thursday's European session. This significant decline comes as investors increase their expectations that the Federal Reserve will maintain its current policy stance for a prolonged period.

Data from the CME FedWatch tool indicates a 57.5% probability that the Fed will either keep the Federal Fund Rate steady within the 3.50%-3.75% range or raise it at the December meeting.

Prolonged high interest rates tend to weigh on assets like silver that do not generate yield, making them less attractive to investors.

Market speculation intensified following the Fed’s latest policy announcement on Wednesday, where officials signaled that no changes to monetary policy would be considered unless inflation moves closer to the central bank’s 2% objective.

Fed Chair Jerome Powell emphasized during the press conference that, “If inflation progress stalls, rate cuts will not follow,” after the central bank opted to keep interest rates unchanged for the second consecutive meeting, as anticipated.

At the same time, ongoing tensions in the Middle East have not provided any upward momentum for silver prices. Typically, geopolitical uncertainty can boost demand for safe-haven assets like silver, but that has not been the case recently.

Earlier today, U.S. President Donald Trump reportedly threatened to destroy the South Pars gas field if it targets Qatar again, and stated that Israel would refrain from attacking the Iranian energy site, according to Al Jazeera.

Technical Outlook for Silver

Silver (XAG/USD) has now declined for three straight sessions, dropping to around $70.40 during European trading hours on Thursday. The short-term outlook has turned decisively bearish, with prices falling well below the 20-day Exponential Moving Average (EMA), which is currently near $81.90 and now acts as a ceiling for any potential rebound.

The 14-day Relative Strength Index (RSI) has slipped to 34.00—its lowest level in 11 months—signaling strong downward momentum.

• Key support is found near the February low at approximately $64.00, followed by the psychological level of $60.00.
• On the upside, initial resistance lies around $75.00, with a move above this level potentially targeting the 20-day EMA near $81.90 as a more significant obstacle to recovery.

(This technical analysis was generated with the assistance of an AI tool.)