16.09.202600:45 Forex Analysis & Reviews: XAG/USD: Price Analysis. Forecast. Silver Attempts a Cautious Recovery Ahead of the Fed's Key Decision

On Tuesday, at the time of writing, XAG/USD trades around $63.76. The white metal is trying to find stability as investors refrain from opening large positions ahead of the Federal Reserve's policy decision on Wednesday. The outlook for silver remains challenging due to a stronger US dollar and rising Treasury yields. Higher yields create larger opportunity costs for non-yielding assets such as precious metals, which can hamper XAG/USD's attempts to continue recovering.

Yields are also rising in other major economies as the energy shock from the Middle East conflict renews inflationary concerns. Higher oil prices force central banks to wrestle inflation back to target. In the US, August CPI rose 3.4% year-on-year, while PPI accelerated to 5.4% from 4.8% in July. These data, combined with recent Fed commentary on the need to contain inflationary pressure, have strengthened expectations of a rate hike on Wednesday.

That said, much of the risk tied to a possible Fed move toward further tightening appears to be priced in already. Therefore, attention should focus on the Fed's updated economic projections and comments by Chair Kevin Warsh about the future path of rates.

Silver could remain under pressure if the Fed signals that September's hike marks the start of a longer tightening cycle. That scenario could push US Treasury yields higher and strengthen the dollar, weighing on silver prices.

Conversely, a less hawkish tone than expected could provide some relief for silver, particularly if it leads to lower yields and a weaker dollar. As a result, the market is especially sensitive to any Fed guidance about upcoming policy moves.

Additionally, rising global bond yields reflect growing government funding needs and concerns about sovereign finances. Over the long term, these concerns could support demand for precious metals as an alternative to sovereign assets. For now, the primary driver of silver's price dynamics remains prospects for interest-rate changes.

Technically, silver has shown resilience below the 50-day SMA but lacks the strength for further gains, as confirmed by a negative RSI. With mixed oscillators, XAG/USD remains range-bound. Key near-term resistance is the 200-day EMA.