Silver Slips Toward $42 as Traders Await Fed Decision.
Silver (XAG/USD) retreats toward $42.00 as traders await Fed policy decision
FUNDAMENTAL OVERVIEW:
Silver (XAG/USD) slid to around $41.50 during European trading on Wednesday, retreating from a 14-year high near $42.80 as profit-taking set in. Investors now turn their focus to the upcoming Federal Reserve (Fed) rate decision for fresh direction.
The pullback was further pressured by improved risk sentiment, supported by easing US-China trade tensions. Both nations appear to be working toward stabilizing relations after years of tariff disputes, though President Donald Trump recently extended tariffs on Chinese goods—covering about 55%—until November 10.
Despite the dip, downside risks for Silver may remain limited. The Fed is widely expected to cut its key lending rate by 25 basis points, lowering it to the 4.00%–4.25% range, the weakest since late 2022. Lower rates typically reduce the opportunity cost of holding non-yielding assets like Silver.
Markets are pricing in a 96% probability of such a move, though the decision may not be unanimous as some FOMC members hold differing views on the scale of easing. Traders will also be closely watching the Fed’s press conference and updated Summary of Economic Projections (SEP), including the ‘dot plot,’ for clues on the pace of future cuts. Any dovish tilt could pressure the US Dollar and lend support to Silver.
XAG/USD TECHNICAL ANALYSIS CHART:
Technical Overview:
XAG/USD is trading within an up channel.
XAG/USD is moving below 20&50 Moving Averages (SMA).
The Relative Strength Index (RSI) is in Buying Zone, while the Stochastic oscillator suggests Negative trend.
Immediate Resistance level: 42.46
Immediate support level: 39.49
HOW TO TRADE XAG/USD
XAG/USD, after a strong rally that drove prices to record highs, is now undergoing a corrective pullback toward a key support zone. This retracement appears more like a healthy consolidation rather than a trend reversal. If the support zone is respected and the price manages to hold above it, renewed buying interest could emerge, paving the way for another leg higher and potentially fresh highs in the sessions ahead.