Silver Price Forecast: Will a Fed Hike Push Silver Below $60?

Slver (XAG) fell toward $63 as investors prepared for the Federal Reserve’s interest rate decision and assessed the risk of inflation from oil above $108. The surge in US Treasury yields and a strong US dollar have added further pressure to silver prices. The technical outlook also remains weak after the rejection at $72. In my view, the guidance by the Fed and the reaction of silver around $60 may determine the next major move. This article presents the main market drivers, key technical levels and possible price scenarios to understand the next move in silver.

Fed Rate Hike Bets and Surging Oil Prices Pressure Silver

Silver fell to $63 ahead of the Federal Reserve decision on interest rates on Wednesday. The markets now price a 92% chance of a rate hike of 25 basis points. Consumer prices inched up 0.4% from July and 3.4% from a year earlier. Producer prices also increased 5.4% year over year.

The strong inflation data pushed the 10-year Treasury yield above 5% and supported the US dollar. The higher yields and strong US dollar put pressure on silver in the short term.

The oil price adds another layer of uncertainty to the silver market. Brent crude oil rose to over $108 after new attacks on the East-West pipeline of Saudi Arabia took it offline. The steep increase in energy prices may help to keep inflation high and force the Fed to keep policy tight.

The economy is also strong. The nominal GDP grew at the annual rate of 6.56% in the second quarter.

The Atlanta Fed’s GDPNow model calls for 4.4% annualized real growth in the third quarter. The strong growth could drive industrial demand, but it also leaves more room to raise rates.

The timing of the decision adds uncertainty to the market. However, the Federal Reserve will base its decision on inflation, employment and broader economic conditions.

But the expected hike is already largely priced into markets. The statement by Warsh may matter more than the decision itself. A warning sign of more rate increases may propel yields and push down silver below current levels. A more measured message may be easier for the dollar and help drive a turnaround. In my view, silver prices could continue to fluctuate between $60 and $72 until the Fed offers more clarity.

Silver Technical Analysis: $60 Support and $72 Resistance in Focus

Descending Channel Keeps Pressure on Silver

The weekly chart for spot silver shows that the price hit the resistance of the descending channel near $72 and continued to drop. The price has been dropping over the past three weeks and shows negative price action.

The immediate support now remains at $60. A break below $60 will likely open the way for further downside toward the $45-$50 region. But a break above $72 will likely reverse the trend and open the way for a strong rally toward the $90 area.

The price action in the silver market shows a rejection at $72. This level lies near the descending trendline.

A failure at this level has also formed a short-term inverted head and shoulders pattern that is now triggering a breakdown near the $62.60 level. This pattern suggests that silver may continue to trade lower in the short term.

The RSI has also moved below the midline and the price is now testing the 50-day SMA. This suggests a negative configuration for silver in the short term.

The chart below shows that silver prices have created a strong rebound around the $55 region and faced strong resistance at $72. If the silver price fails to break above $72 and drops further to the $50 area, it will likely offer the opportunity for long-term investors.

However, the formation of inverted head and shoulders patterns from February 2021 to May 2024 suggests positive price action in the long term. Therefore, if the price corrects toward the $50 zone again, it will likely offer strong pivotal point for long-term investors.

Long-Term Silver Price Structure Remains Bullish

Despite the negative price action in the short term, the picture remains strongly bullish in the long term. This bullish picture is reflected in the cup and handle formation on the monthly chart.

The price spiked toward $120 in 2026 after the breakout and then corrected back toward the breakout area to the support zone of $50-$55. The price now consolidates around this level to determine the next move. A break below $50 will likely open the way for further downside toward lower levels.

But if the price holds the support zone of $45-$50 support zone, it will likely open the way for another surge above $120 in the next few months.

Silver Price Scenarios and Risk Analysis

The base case is for the Fed to raise rates by 25 basis points but not to send a strongly hawkish message. In this case, silver may consolidate between $60 and $72 as the expected hike is already priced into the market.

The bearish scenario would develop if Warsh signals additional hikes and the Treasury yields continue to rally. This scenario would then indicate a move below $60 and push the price to the $50 area.

The bullish scenario requires a break above $72. This scenario will be supported by lower yields, the strength of the US dollar or softer Fed guidance. If this bullish pattern holds, the subsequent target may be the $100 region.

The main downside risk comes from the high oil prices and persistent inflation. Those pressures may lead the Fed to be more aggressive on tightening policies than markets expect.

A rising dollar, rising yields and slowing industrial activity could deepen the decline. But if the Fed sends a dovish message, the pressure can quickly be turned around. Geopolitical tensions also have the potential to boost safe haven demand for silver.

What to Watch Next In Silver

Silver remains under pressure in the short term as markets wait for the Fed decision. High oil prices, rising Treasury yields and strong US dollar continue to weigh on the metal. A 25 basis point hike is largely priced in, so the message by Warsh may decide the next move. A hawkish signal could push silver below $60 and open the way toward $50. But a measured message could reduce the pressure and help the price recover toward $72.

The silver outlook remains bullish in the long term while the $45-$50 support zone holds. A break above $72 would confirm the strength and could drive silver to $90. A break above $90 would suggest a move to the $120 region. But a sustained break below $45 would weaken this outlook and expose lower levels. In my view, the guidance by the Fed and the reaction of silver around $60 will provide the clearest direction for the next move.

Read more: Fed Hike Risk Threatens Support In Gold and Silver