Silver (XAG/USD) is consolidating near $66.35 at the start of the week, trading in a tight range during the Asian session [1]. Investors are closely monitoring developments in the Middle East, particularly regarding oil supply, as well as the outlook for United States interest rates [1]. Oil prices have continued to decline in Monday's Asian trade, driven by increased hopes for US-Iran diplomacy. This optimism follows remarks from President Donald Trump, who indicated he would probably be open to meeting Iranian President Masoud Pezeshkian this week at the United Nations General Assembly in New York, according to TimesNow [1].
Lower oil prices are easing fears of high inflation expectations, which in turn reduces projections for high interest rates. This scenario is favorable for non-yielding assets like Silver, as lower rates typically support their prices [1]. Investors are also seeking clarity on how long the Federal Reserve will maintain its monetary-tightening cycle, which began last week to counter inflationary pressures [1]. Over the weekend, Minneapolis Fed Bank President Neel Kashkari stated that "inflation is too high across all sectors of the US economy," emphasizing that resilient economic growth is also contributing to price pressures, not just rising oil prices [1].
From a technical perspective, XAG/USD is trading above the 20-day Exponential Moving Average (EMA) at $65.22, maintaining a modest bullish bias. The Relative Strength Index (RSI) is near 54, indicating steady, rather than overstretched, upside momentum [1]. Immediate support is seen at the 20-day EMA ($65.22), and a daily close below this level could signal fading bullish pressure and a deeper corrective phase toward prior lows. The major resistance for Silver is the August 28 high at $71.12 [1].
Silver's price is influenced by geopolitical instability, recession fears, and interest rate expectations. As a yieldless asset, Silver tends to benefit from lower interest rates and is often used as a hedge during high-inflation periods [1].
CONCLUSION
Silver is consolidating near $66.35, supported by easing inflation fears due to declining oil prices and ongoing uncertainty about the Federal Reserve's rate policy. Technical indicators suggest a modest bullish bias, with key support and resistance levels in focus. Investors remain attentive to geopolitical developments and Fed signals, which could drive future price action.