Silver Holds Near $63 as Fed and Geopolitical Risks Weigh

Key Moments

Price Action and Market Context

Silver (XAG/USD) is trading near $63.45 on Wednesday, showing a modest gain of 0.16% at the time of writing. The metal is attempting to stabilize after dropping to an intraday low of $62.19, extending the decline that followed Tuesday’s rejection from the $66.50 region.

The recovery is occurring in a cautious market backdrop. The broader tone remains defensive, limiting interest in Silver even as it tries to rebuild from recent losses.

Geopolitics, Energy Markets, and Inflation Concerns

Investors continue to track the worsening situation in the Middle East. The Memorandum of Understanding between the United States (US) and Iran expired on Monday, and US President Donald Trump stated on Tuesday that there are currently no talks underway with Tehran.

Disruptions to maritime traffic through the Strait of Hormuz are contributing to persistent tensions in the energy space. These developments are reinforcing market worries about the inflationary impact of higher Oil prices. Such inflation risks could complicate the Federal Reserve’s (Fed) policy decisions and constrain its ability to adjust monetary settings.

Fed Minutes in Focus and Shifting Rate Expectations

Attention now turns to the Minutes of the Federal Open Market Committee (FOMC) July meeting, scheduled for release on Wednesday at 18:00 GMT. Market participants are looking for more detailed guidance on the likely trajectory of US interest rates.

Since that July gathering, incoming labor market and inflation data have come in weaker than anticipated, leading traders to scale back expectations for a September rate hike. Based on the CME FedWatch tool, markets currently assign a 32% probability to an increase at the next meeting.

This repricing has helped temper some of the pressure on precious metals, which tend to be supported when investors expect a less restrictive policy stance. However, the ongoing inflation threat from higher energy prices continues to underpin the possibility of additional Fed tightening over a longer horizon.

As a result, US Treasury yields remain elevated, even after a modest dip on Wednesday. These higher yields weigh on the relative attractiveness of non-yielding assets such as Silver.

Balancing Softer Data and Inflation Risks

The upcoming Fed Minutes could serve as the next directional catalyst for XAG/USD. Market participants will be evaluating how policymakers are weighing softer US economic indicators against inflation pressures linked to the Middle East conflict, and how this balance may shape the future path of interest rates.

Technical Overview for XAG/USD

On the one-hour chart, XAG/USD is quoted at $63.46, maintaining a restrained near-term bias as it trades below the 100-period simple moving average (SMA) at $64.74 and the 200-period SMA at $64.65. A nearby horizontal barrier at $63.50 adds to the overhead supply just above spot. The Relative Strength Index (RSI) stands at 44.51, remaining under the neutral 50 mark and suggesting that the current rebound may struggle to extend significantly.

On the upside, initial resistance is seen at $63.50, followed by the 200-hour SMA at $64.65 and the 100-hour SMA at $64.74. A more robust ceiling is aligned with the previous horizontal cap around $66.80.

On the downside, the first notable support comes in at $62.60. A more substantial demand area is identified near $61.00, where buyers would likely show increased interest if the current pullback deepens.