• Silver remains under pressure as traders await the Fed’s monetary policy announcement.
• The 4-hour chart shows XAG/USD trading within a descending channel.
• A positive MACD hints at stabilisation, but RSI below 50 signals weak buying momentum.

Silver (XAG/USD) consolidates modest losses on Wednesday as traders hold back from aggressive bets ahead of the Federal Reserve’s (Fed) monetary policy announcement at 18:00 GMT. Meanwhile, the US Dollar (USD) also eases slightly, helping limit the downside. At the time of writing, the white metal trades around $5410, down 0.57% on the day, but holds above the fresh year-to-date low of $52.67 touched on Tuesday.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, is little changed around 102.33 after reaching a fresh two-week high of 102.49 earlier in the day.

The metals' next move hinges on the Fed’s policy outlook rather than the decision itself, as policymakers are widely expected to leave interest rates unchanged at 3.75%-4.00% after delivering a 25-basis-point hike in September. Inflation risks remain tilted to the upside, partly due to higher energy costs linked to Middle East tensions, while policymakers remain committed to bringing inflation back to the 2% target.

Against this backdrop, signals of further rate hikes could support the US Dollar and keep Silver under pressure. Higher interest rates increase the opportunity cost of holding the non-yielding metal, while a stronger Dollar makes it more expensive for overseas buyers. A less hawkish tone, however, could weigh on the Greenback and help Silver recover.

Technical Analysis

On the 4-hour chart, XAG/USD remains within a descending channel, with the price trading below the 50-period, 100-period and 200-period Simple Moving Averages (SMAs), keeping the near-term outlook bearish despite a modest MACD recovery.

The Relative Strength Index (RSI) around 44 stays below the midline, hinting at subdued buying pressure even as Moving Average Convergence Divergence (MACD) turns positive, pointing more to consolidation within a bearish context than to a sustained reversal.

On the topside, initial resistance is aligned at the horizontal barrier near $55.00, followed by the 50-period SMA at $55.58. A clear break above these would be needed to ease immediate downside pressure and expose the 100-period SMA at $57.41. Beyond that, the upper boundary of the descending channel near $60 and the 200-period SMA around $60.34 form a distant cap.

On the downside, initial support lies in the $52.00-$52.50 zone, near the lower boundary of the descending channel. A break below this area could open the door to further losses toward the horizontal support at $50.00.

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

Silver FAQs

Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.

Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.

Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.

Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.