Silver traded near $80.50 in Europe on Tuesday, moving in a narrow range ahead of the Federal Reserve policy decision on Wednesday. The Fed is expected to keep rates at 3.50%–3.75%, and CME FedWatch points to no change for the next four meetings. Holding rates steady for longer can weigh on non-yielding assets such as silver. Markets will watch the Fed’s dot plot and Jerome Powell’s press conference for guidance on the US rate path.

Middle East Tensions Support Silver

Middle East tensions were reported as a factor supporting silver, with Reuters citing Iran’s new Supreme Leader, Mojtaba Khamenei, rejecting peace proposals. Silver is often treated as a safe-haven during geopolitical stress. On the 4-hour chart, XAG/USD formed a descending triangle around $80.50, with a falling line from the 1 March high at $96.62 capping gains near $84.00. Support was noted from the 3 March low near $78.00, with resistance at the 20-period EMA around $81.80 and support levels at $79.00 and $78.50. Silver prices can be influenced by interest rates, the US dollar, safe-haven demand, industrial use, mining supply, recycling, and moves in gold, including the gold/silver ratio. As of March 17, 2026, silver is showing hesitation around the $28.50 mark as we look towards the Federal Reserve’s policy meeting this week. The market is quiet while traders wait for clear signals on interest rates. This cautious mood is typical before major economic announcements.

Fed Outlook And Market Positioning

We anticipate the Fed will hold interest rates steady in the current 4.75%-5.00% range. Recent inflation data from February came in a bit higher than expected at 3.1%, making an immediate rate cut very unlikely. This prolonged high-rate environment tends to be a headwind for non-yielding assets like silver. Ongoing geopolitical risks in the Middle East continue to provide a floor for the silver price. These persistent tensions encourage investors to hold some safe-haven assets. As a result, any significant dips in price may be viewed as buying opportunities by those hedging against instability. For derivative traders, the current setup suggests a cautious to bearish stance. We saw similar hesitation back in 2025 when the price consolidated before breaking lower under the pressure of Fed policy. Buying put options with a strike price below the key $27.00 support level could be a way to position for a potential downturn. On the other hand, any surprisingly dovish talk from the Fed could spark a rally. Industrial demand remains strong, with the Silver Institute projecting an 8% increase in photovoltaic use for 2026, which underpins long-term value. A trader might consider buying out-of-the-money call options to cheaply position for a break above the $29.50 resistance. We should also watch the gold-silver ratio, which is currently sitting around 84:1. Historically, this level is quite high, suggesting silver may be undervalued compared to gold. This could support a pairs trading strategy, going long silver and short gold derivatives if the ratio begins to contract. Create your live VT Markets account and start trading now.

Start trading now – Click here to create your real VT Markets account