• Silver price advances 0.37% on Monday, trading around $66.50 at the time of writing.
• Falling Oil prices ease inflation concerns as Washington and Tehran signal openness to renewed dialogue.
• Fed officials remain cautious amid elevated inflation, limiting the precious metal’s upside momentum.

Silver (XAG/USD) starts the week on a positive note, gaining 0.37% on Monday to trade around $66.50 at the time of writing. The precious metal manages to advance despite a stable US Dollar (USD), with the US Dollar Index (DXY) trading virtually unchanged around 100.25.

Investors remain primarily focused on developments in the Middle East and their implications for energy prices. Falling Oil prices provide some support to Silver, as lower energy costs help ease concerns about inflationary pressures and, consequently, the prospect of US interest rates remaining elevated for longer.

Oil prices decline as hopes of renewed dialogue between Washington and Tehran increase. US President Donald Trump said he would probably be open to meeting Iranian President Masoud Pezeshkian on the sidelines of the United Nations (UN) General Assembly in New York this week. The prospect helps reduce some of the geopolitical risk premium embedded in energy prices.

However, tensions remain elevated in the Middle East. Iranian security official Mohsen Rezaei said Tehran has conveyed its conditions to the US through international mediators, while warning that Iran would respond strongly to another US attack. Fighting involving Iran-backed Houthis and Saudi forces also keeps geopolitical risks in focus.

At the same time, the US monetary policy outlook remains a key driver for Silver. The Federal Reserve (Fed) raised interest rates by 25 basis points (bps) last week to counter inflationary pressures, while investors now assess the possibility of further monetary tightening in the coming months.

Goolsbee flags persistent supply shocks, keeps Fed bias cautiously hawkish

Fed’s Goolsbee delivered a more hawkish-leaning message than usual, with a 7.4/10 FXS Speechtracker score standing notably above the 6.4/10 historical baseline. The emphasis on being “optimistic” about returning to 2% inflation only if there is no further evidence of demand overheating, alongside the assertion of “no ambiguity” about tightening if demand runs too hot, underscores a conditional but firm tightening bias. At the same time, the focus on persistent supply shocks and the need for clear evidence that supply-driven inflation is fading signals reluctance to declare victory on inflation, keeping the policy tone guarded and data-dependent for the Dollar.

The FXS Fed Sentiment Index slipped by 1.07 points to 149.54, indicating a modest pullback in perceived hawkishness even as the overall stance remains firmly above the neutral 100 mark. This configuration suggests that, despite a slight softening in tone versus recent peaks, the Fed is still viewed as clearly hawkish in aggregate, consistent with Goolsbee’s conditional readiness to respond to renewed demand overheating as captured by the FXS Speechtracker.

Ahead, investors will monitor preliminary S&P Global Purchasing Managers Index (PMI) data and the University of Michigan (UoM) Consumer Sentiment survey this week. Several Fed officials are also scheduled to speak and could provide fresh clues about the outlook for US interest rates.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $66.56, maintaining a constructive near-term bias as it holds above both the 100-period simple moving average (SMA) at $64.92 and the 200-period SMA at $64.89. The pair has backed off recent highs but price remains underpinned by this rising medium-term base, while the Relative Strength Index (RSI) near 57 suggests moderate positive momentum rather than overbought conditions, leaving scope for another push higher as long as the metal stays supported above its key averages.

On the topside, initial resistance emerges at the horizontal barrier around $67.35, with a subsequent cap seen at $68.30 if buyers extend the recovery. On the downside, immediate support is aligned near $65.80, ahead of a lower horizontal floor at $65.19, while the clustered 100- and 200-period SMAs just below $65 provide a deeper dynamic support zone that would need to give way to weaken the current bullish bias.

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

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.