Silver price forecast: can XAG/USD rebound as Fed rate bets shift?

Silver prices edged lower on Tuesday as traders took profit after a sharp relief rally driven by the US-Iran peace framework and lower oil prices.

XAG/USD traded near $69.85 in early European dealing, retreating from a weekly high as attention shifted from geopolitics to the Federal Reserve’s policy decision on Wednesday.

The pullback was measured rather than disorderly.

Lower energy prices have eased some inflation concerns, while the dollar remains near recent lows.

Even so, silver still faces a difficult technical setup, with momentum indicators showing that buyers have yet to regain control of the short-term trend.

Fed expectations keep silver supported

The biggest question for silver is whether the Fed sounds less worried about inflation after the fall in oil prices.

The US central bank is widely expected to hold rates in a 3.50% to 3.75% range this week, but the statement and Chair Kevin Warsh’s comments will matter more than the decision itself.

Silver, like gold, does not pay interest. That makes it sensitive to shifts in rate expectations and the dollar.

Traders have cut the probability of a December US rate hike to about 58%, from nearly 70% last week, according to CME FedWatch data.

Edward Meir, an analyst at Marex, told Reuters that a dovish signal from Warsh could weaken the dollar and trigger another rally in precious metals.

The same logic applies to silver, especially after Monday’s strong rebound.

Peace deal limits the downside

The US-Iran framework has also helped improve sentiment across commodities.

The proposed reopening of the Strait of Hormuz has pushed oil lower, easing fears that energy costs will keep inflation elevated for longer.

That has offered a cushion to silver, even as traders lock in gains. A lower oil price reduces pressure on central banks to tighten further, which is generally supportive for non-yielding assets.

Still, markets are not treating the deal as risk-free.

Details of the agreement remain limited, and investors are waiting to see whether shipping through Hormuz can return safely and predictably. Any setback in talks could bring back demand for havens, but it could also revive inflation fears if crude prices jump again.

Technical picture stays fragile

Silver’s chart still points to caution.

The metal remains below the Bollinger Bands’ 20-day simple moving average and the 100-day simple moving average, keeping the broader bias tilted lower.

The relative strength index is also below the midline, suggesting weak momentum rather than a clear bullish turn.

The first resistance sits near $72.25. A move above that level could open the way to $74.14, followed by the 100-day SMA near $78.55 and the upper Bollinger band around $80.72.

On the downside, $63.80 remains the main support area to watch. Until silver clears nearby resistance, rallies may continue to face selling pressure.