Silver (XAG/USD) fell on Wednesday as the US Dollar strengthened and US Treasury yields rose. It was trading near $71.20, down more than 2% on the day.
The Federal Reserve kept its benchmark rate at 3.50%–3.75%, as expected. The decision was split 8–4, with Stephen Miran backing a 25 basis point cut, while Beth Hammack, Neel Kashkari and Lorie Logan opposed adding any easing bias to the statement.
Fed Signals Inflation Still Elevated
The Fed said economic activity is expanding at a solid pace and labour market conditions are stable, with the Unemployment Rate little changed in recent months. It also said inflation remains elevated, partly due to higher global energy prices.
The Fed referenced geopolitical risks, with Middle East developments adding uncertainty to the outlook. It repeated its aim to support maximum employment and return inflation to a 2% target over time.
On charts, XAG/USD is below the 50-day SMA at $78.45 and the 100-day SMA at $79.63, but above the 200-day SMA at $62.56. The RSI (14) is near 38 and MACD is below zero.
Support is near $62.56, then $54.00, while resistance sits at $78.45 and $79.63. The technical section was produced with help from an AI tool.
Silver Outlook Shifts As Policy Eases
Looking back at the Fed’s hawkish stance in 2025, we can see how a divided committee and inflation fears kept silver prices suppressed. The metal struggled around the $71 level as the market braced for higher interest rates for a longer period. That environment created significant headwinds for non-yielding assets like silver.
Today, the landscape is notably different, with the Federal Reserve having already initiated two 25-basis-point rate cuts in early 2026, bringing the benchmark rate down to the 3.00-3.25% range. This pivot was driven by cooling inflation, with the latest CPI report for March showing a welcome decline to 2.8%. This easing cycle fundamentally changes the opportunity cost of holding silver.
We see silver now trading much higher, consolidating around the $85 mark and reflecting the shift in monetary policy. With the Fed signaling at its last meeting that another cut is likely before the end of the third quarter, buying call options on silver futures for the coming months is a prudent strategy. These positions would benefit from further upside as lower interest rates and a softer dollar typically boost precious metal prices.
In 2025, we noted that silver was trading below its key 50 and 100-day moving averages, which acted as strong resistance. Currently, the metal is holding firmly above these same moving moving averages, which are now acting as support for the ongoing uptrend. This technical strength suggests that dips are likely to be viewed by the market as buying opportunities.
While the outlook is positive, we remain mindful of the support levels from that period, particularly the structural floor noted around $54. An unexpected reversal in the Fed’s policy due to a sudden economic shock remains the primary risk to our bullish outlook. Therefore, using options can help define risk, allowing us to participate in the upside while capping potential losses.
