Silver (XAG/USD) traded 1.14% higher near $57.80 during the Asian session on Wednesday, even as oil prices rebounded sharply amid renewed US-Iran tensions. WTI Oil rose 3.65% to approximately $81.20, ending a three-day losing streak, following reports from US Central Command (CENTCOM) that all ballistic missiles launched by Iranian IRGC forces were intercepted. CENTCOM also stated it conducted precision strikes in Iraq against Iran-backed groups allegedly planning attacks on US forces and Saudi oil facilities [1].
Despite the recent gain, silver has underperformed in recent months, pressured by higher oil prices that have fueled inflation expectations and prompted global central banks to maintain or raise interest rates. Higher rates typically weigh on non-yielding assets like silver [1].
Investors are closely watching the upcoming Federal Reserve policy announcement at 18:00 GMT. According to the CME FedWatch tool, there is a 69.5% probability that the Fed will keep interest rates unchanged at 3.50%-3.75%, marking the fifth consecutive meeting with no change. Fed Chairman Kevin Warsh previously indicated that no forward guidance should be expected at this meeting, stating that 'so-called forward guidance is not well-suited in the current policy juncture' [1].
From a technical perspective, XAG/USD remains below its 20-day Exponential Moving Average (EMA) at $58.93, suggesting a bearish near-term tone. The Relative Strength Index (RSI) is around 43, below the neutral 50 line, indicating ongoing downside pressure. Key resistance is at the 20-day EMA ($58.93), with a daily close above this level needed to shift the bias upward toward $60.00. On the downside, support is seen at the July 17 low of $54.77 [1].
CONCLUSION
Silver's modest gain comes amid heightened geopolitical risks and ahead of a closely watched Federal Reserve decision, with technical indicators still signaling downside pressure. The market remains cautious, awaiting further direction from the Fed, while silver's performance continues to be influenced by inflation expectations and central bank policy.