Silver (XAG/USD) trades under pressure on Wednesday as a stronger US Dollar and rising US Treasury yields weigh on the non-yielding metal following the Federal Reserve’s (Fed) monetary policy decision. At the time of writing, XAG/USD trades around $62.68, down 1.56% on the day.
The Fed raises the federal funds target range by 25 basis points to 3.75%-4.00% in a unanimous 12-0 decision. In its statement, the central bank says economic activity is expanding at a solid pace, domestic spending remains resilient and unemployment has changed little. Policymakers add that inflation remains elevated and that the rate increase will help bring inflation back to the 2% target sooner.
The US Dollar Index (DXY) advances above the psychological 100.00 mark, while the benchmark 10-year US Treasury yield rebounds toward 5.00%.
Higher interest rates and rising bond yields typically weigh on Silver by increasing the appeal of interest-bearing assets. However, the metal’s decline remains limited as the quarter-point hike was widely expected.
Fed Chairman Kevin Warsh also strikes a hawkish tone, saying inflation remains too high and that the economy is strong enough for policymakers to focus on price stability, while describing the labour side of the Fed’s mandate as “in good shape.”
Technical Analysis
On the daily chart, the near-term bias leans bearish as price holds above the 50-day Simple Moving Average (SMA) at $62 but remains well below the 100-day and 200-day SMAs at $66 and $73, respectively, suggesting rallies are still capped by the broader downtrend. The Relative Strength Index (RSI) near 45 and a negative Moving Average Convergence Divergence (MACD) reading with red histogram bars hint at soft momentum and a lack of strong directional conviction.
On the downside, initial support is seen near the 50-day SMA at $62, with further cushions at the psychological $60.00 level and then $55 if selling pressure accelerates. On the topside, a recovery toward the 100-day SMA at $66 would face notable resistance, while any extension beyond that level would bring the 200-day SMA at $73 into focus as a stronger medium-term barrier.
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