Silver Hits $63.80 as Oil Falls and Fed Hikes Rates
Silver traded at $63.80 per troy ounce on Thursday. This level reflects a recovery after previous losses. Crude oil prices declined during the same period. The US Federal Reserve raised interest rates by 25 basis points.
Silver (XAG/USD) traded at $63.80 per troy ounce during Asian hours on Thursday. This price point marks a gain following losses the previous day. The movement aligns with a broader retreat in crude oil prices. Lower energy costs reduce immediate inflation concerns. This dynamic provides support for non-yielding assets like silver.
Saudi Arabia announced it will restore half of the East-West pipeline capacity within days. The pipeline was damaged by drone attacks last week. Full operation is expected to resume within six weeks. This route bypasses the Strait of Hormuz. The news eased fears of sustained supply disruptions in the oil market.
Fed hike increases holding costs
The US Federal Reserve raised the federal funds rate by 25 basis points. The target range is now 3.75% to 4.00%. This is the first rate increase in three years. Higher rates raise the opportunity cost of holding silver. Silver does not yield interest. Fed Chair Kevin Warsh stated inflation remains too high. He signaled the possibility of further hikes before the year ends.
Money markets price in a 49.8% chance of another hike in October. This probability is derived from the CME FedWatch tool. Analysts note that persistent interest rate pressure limits upside for precious metals. The balance between inflation easing and rate hikes remains tight for silver investors.
Technical levels define near-term bias
The daily chart shows a bearish near-term bias for XAG/USD. Price holds below the nine-period and 50-period Exponential Moving Averages. The 14-day Relative Strength Index stands at 47.3. This reading suggests consolidation rather than oversold conditions. Immediate resistance sits at $64.36, the nine-period EMA level.
Stronger resistance is located at $64.70, the 50-period EMA. A sustained break above this level would signal a stronger bullish phase. Downside support depends on momentum near the RSI level of 47. A drop in RSI toward 40 would indicate intensifying bearish pressure. The current structure caps recent rebounds in silver prices.
Supply recovery impacts oil markets
Saudi Arabia is ramping up crude transport through the Strait of Hormuz. US military assistance supports these increased volumes. The East-West pipeline serves as a critical alternative export route. Its partial restoration reduces the risk premium on oil. This stabilizes energy prices and indirectly supports silver by moderating inflation expectations.
The interplay between oil supply and interest rates drives current silver trends. Source data from GN auto markets/commodities: silver prices highlights this dual dynamic. Traders monitor the pipeline repair timeline closely. Any delays could reverse the recent oil price decline. Such a reversal would likely pressure silver prices again.
