Stronger USD Weighs on Silver Amid Fed Rate Hike

The US Dollar (USD) and rising Treasury yields have weighed heavily on Silver prices. After the Federal Reserve's (Fed) decision to raise the federal funds target range by 25 basis points to 3.75%-4.00%, the XAG/USD pair is trading around $62.68, down 1.56% on the day.

The Fed stated that economic activity is expanding at a solid pace and domestic spending remains resilient, but inflation remains elevated. The rate increase aims to bring inflation back to the 2% target sooner, according to policymakers.

Higher interest rates typically weigh on Silver as investors seek higher-yielding assets. However, the quarter-point hike was widely expected, limiting the metal's decline. Fed Chairman Kevin Warsh emphasized that inflation remains too high and the economy is strong enough for focus on price stability.

The near-term bias leans bearish as the XAG/USD pair holds above the 50-day Simple Moving Average (SMA) at $62 but remains below the 100-day and 200-day SMAs. Initial support lies near the 50-day SMA, with further cushions at $60 and $55 if selling pressure accelerates.