Silver Slips as Energy Jitters Fuel Inflation Fears

Key Moments

Market Overview

Silver prices (XAG/USD) are weakening further, trading around $63.00 in the Asian session on Wednesday, marking a 0.5% decline. The metal continues to retreat after Tuesday’s pullback, as investors remain wary that inflation pressures could persist amid ongoing disruptions in energy supply.

At the time of writing, WTI crude oil is quoted close to a two-week high near $85.11. Elevated oil prices are unsettling global inflation expectations, fueling concerns that central banks may need to consider additional interest rate increases. This environment tends to weigh on non-yielding assets such as Silver, whose appeal typically diminishes when rate expectations rise.

Energy Supply Risks and Geopolitical Backdrop

Fears that energy supply constraints may remain unresolved are being reinforced by comments from US President Donald Trump, who stated that “there are no talks or conversations going on, or scheduled, with the Islamic Republic of Iran”. This stance adds to the market perception that there is limited progress toward easing supply-side pressures in energy markets.

Monetary Policy Watch: FOMC Minutes in Focus

Attention in the rates market is turning to the publication of the Federal Open Market Committee (FOMC) Minutes from the July policy meeting, scheduled for release at 18:00 GMT. However, traders are not expecting substantial new direction on the Federal Reserve’s interest rate path, as Chairman Kevin Warsh has maintained a stance of “no forward guidance” on policy rates.

According to the CME FedWatch tool, current pricing indicates that the Federal Reserve is expected to keep interest rates unchanged at the September policy meeting.

Silver Technical Picture

From a technical standpoint, XAG/USD is trading at $63.04, hovering near the 20-day Exponential Moving Average (EMA) located at $62.41. This proximity suggests a cautious short-term outlook, with neither bulls nor bears asserting decisive control.

The 14-period Relative Strength Index (RSI) stands at 52.59, a neutral-to-positive reading that indicates bullish forces remain present but are no longer in an overextended phase.

On the downside, initial support is seen at the 20-day EMA at $62.41, an area where dip-buying interest may emerge if corrective pressure persists. Below that, the $60.00 round figure is the next key level to monitor. On the upside, the August 10 high around $66.00 is acting as a notable resistance zone, where supply is expected to intensify.