Silver price (XAG/USD) is down 1.25% to near $63.60 during the European trading session on Thursday. The white metal faces intense selling pressure after hawkish remarks from New York Federal Reserve (Fed) Bank John Willams, a permanent voting member, in the European trade.
The comments from Feds Williams signaled that the central bank is highly worried about rising inflationary pressures and is gaining confidence on the overall job outlook.
Regarding the United States (US) interest rate outlook, Feds Williams said that it is “reasonable to see another rate hike by end of year.”
Williams flags resilience and inflation challenge as Fed keeps hawkish bias
Feds Williams delivers a notably firm message, with a 7.2/10 FXS Speechtracker score standing above the 6.2/10 historical average, underscoring confidence in US economic resilience and reduced downside risks to maximum employment. The emphasis that the “big challenge is on inflation,” the acknowledgement of “pretty strong demand from AI,” and the remark that another rate hike by year-end is “reasonable” all point to a stance that keeps the door open to further tightening even as explicit forward guidance is dialed back.
The FXS Fed Sentiment Index slipped by 0.18 points to 148.63, indicating a modest pullback in perceived hawkishness. Despite the decline, the index remains firmly in hawkish territory well above the 100 neutral line, signaling that the Feds overall tone continues to support the Dollar even as markets question the durability of higher yields.
The Silver price was already under pressure as United States (US) Treasury Yields have rallied on fresh acceleration in Federal Reserve (Fed) interest rate hike expectations.
According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in all two policy meetings remaining this year have increased to 55% from 42.3% seen on Tuesday.
Following remarks from Feds Williams, 10-year US Treasury Yields have extended their rally to near 5.14%, the highest level seen in over 19 years. Higher yields on interest-bearing securities result in a erosion in appeal of non-yielding assets, such as Silver.
Silver Technical Analysis
In the daily chart, XAG/USD trades at $63.79, keeping a bearish near-term tone as it holds below the 20-day exponential moving average (EMA) at $65.15. The metal has retreated from recent highs and the price location beneath this key dynamic barrier suggests rallies are likely to be capped unless buyers can reclaim the EMA, while the Relative Strength Index (RSI) at 46.18 hints at only modest downside momentum rather than outright oversold conditions.
On the topside, immediate resistance is defined by the 20-day EMA at $65.15, where a daily close above would ease the current pressure and open the way for a more constructive recovery. On the downside, the August 19 low at $62.19 is the key support level.