Silver price falls as Fed hawkish outlook drives US yields higher

• Silver falls more than 1% on Thursday as rising interest-rate expectations weigh on the non-yielding metal.
• New York Fed President John Williams says another rate hike by year-end would be reasonable as inflation remains a concern.
• US Treasury yields surge to multi-year highs despite better-than-expected weekly jobless claims.

Silver (XAG/USD) extends its decline on Thursday, falling 1.23% on the day to trade around $63.65 at the time of writing. The precious metal comes under heavy selling pressure as increasingly hawkish expectations surrounding the Federal Reserve (Fed) push United States (US) Treasury yields sharply higher.

The latest downward move accelerated after New York Fed President John Williams signaled that another interest-rate increase this year remains possible. Williams said it is “reasonable to see another rate hike by end of year” and stressed the need to bring inflation back toward the central bank’s 2% target promptly.

The remarks reinforce market expectations that the Fed could continue tightening monetary policy after its latest 25-basis-point rate increase. According to the CME FedWatch tool, investors now assign a roughly 71% chance to another rate hike at the October meeting, up from around 55% a week earlier.

The shift in interest-rate expectations sends US Treasury yields sharply higher. The benchmark 10-year US Treasury yield rose toward 5.15% on Thursday, its highest level since 2007. Higher bond yields tend to weigh on Silver as they increase the opportunity cost of holding non-yielding assets. The accompanying strength of the US Dollar (USD) adds another headwind for the US Dollar-denominated metal.

Meanwhile, Thursday's US labor market data remain resilient. Initial Jobless Claims declined slightly to 197K in the latest week from a revised 198K previously, beating market expectations of 201K0. Continuing Jobless Claims edged slightly higher to 1.719M from 1.717M, but remained below the 1.75M expected. The figures offer little evidence of a sharp deterioration in employment conditions and therefore provide limited grounds for the Fed to turn more accommodative.

XAG/USD technical analysis

In the one-hour chart, XAG/USD trades at $63.61, extending its bearish near-term bias as price holds beneath both the 100-period simple moving average (SMA) at $65.77 and the 200-period SMA at $64.90. A dense band of nearby horizontal resistance between $64.00 and $64.56 reinforces the downside tone, although the Relative Strength Index (14) at 27.85 shows oversold conditions that could slow immediate selling rather than signal a sustained recovery.

On the topside, initial resistance appears at $64.00 and $64.56, ahead of the 200-period SMA at $64.90 and the $64.95 barrier, while the 100-period SMA at $65.77 and the $65.80 level form a higher cap before $67.55 and $68.30. On the downside, first support is now seen at $63.33, with subsequent cushions at $62.85 and $62.30, where buyers would need to emerge to prevent a deeper slide in the short term.

(The technical analysis of this story was written with the help of an AI tool. Know more.)