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Silver accelerates above $66 as Fed expectations shift

  • Silver gains 2.47% on Monday and trades around $66.30 after rebounding from Friday’s lows.
  • Disappointing US data reduces expectations of a September rate hike and weighs on the US Dollar.
  • Minutes from the Fed’s July meeting, due on Wednesday, could provide fresh clues about the interest rate outlook.

Silver (XAG/USD) extends its advance on Monday and trades around $66.30 at the time of writing, up 2.47% on the day. The white metal continues to rebound from the $63.50 area reached on Friday, mainly supported by the weakening US Dollar (USD) and fading expectations that the Federal Reserve (Fed) will raise interest rates again in September.

The shift in monetary policy expectations follows a series of disappointing US economic releases. US Retail Sales declined by 0.6% in July, while markets had expected a 0.1% increase, following a 0.2% rise in June.

These figures add to the annual slowdown in the Consumer Price Index (CPI) and Producer Price Index (PPI), as well as the weak July Nonfarm Payrolls (NFP) report. The accumulation of signs pointing to a slowdown in the US economy is reducing pressure on the Fed to raise interest rates further.

According to the CME FedWatch tool, markets now see around a 70% chance that the US central bank will leave interest rates unchanged at its September meeting, up from 48% a week earlier.

This repricing weighs on the US Dollar and provides support to Silver. The US Dollar Index (DXY), which measures the Greenback’s value against a basket of six major currencies, trades around 99.50 at the time of press after touching 99.30, its lowest level since June 5. A weaker US Dollar tends to make precious metals denominated in the US currency more attractive to investors using other currencies.

Investors remain attentive to geopolitical tensions in the Middle East, particularly around the Strait of Hormuz. Persistent risks to energy supplies are keeping Oil prices elevated and could fuel inflationary pressures, potentially limiting the Fed’s ability to adopt a more accommodative stance.

Market attention now turns to the Minutes of the July Federal Open Market Committee (FOMC) meeting, due on Wednesday. The document could provide further insight into the balance of risks within the Fed and determine whether the recent decline in rate hike expectations can persist, a factor likely to remain a key driver for Silver in the near term.

Chart Analysis XAG/USD

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $66.36, retaining a bullish near-term bias as price holds well above the 100-period simple moving average (SMA) near $65.14 and the 200-period SMA around $64.04. The metal also respects an ascending trend-line support coming from $63.51 and now intersecting near $65.38, reinforcing the constructive structure, while the Relative Strength Index (RSI) around 65 suggests firm but not yet extreme upside momentum.

On the topside, the immediate hurdle is the horizontal resistance at $66.80, where buyers could face profit-taking. On the downside, initial protection is seen at the rising trend-line support near $65.38, followed by the 100-period SMA at $65.14; a deeper retreat would expose horizontal support at $64.25 ahead of the 200-period SMA at $64.04, where broader bulls would be expected to defend the uptrend.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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Why is Crude Oil priced for a reopening the ships haven't made?
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