Silver accelerates above $66 as Fed expectations shift

Silver (XAG/USD) continues its upward trend, reaching approximately $66.30 on Monday, marking a 2.47% increase for the day. The white metal's recovery stems from the US Dollar's weakness and the reduced expectation of a Federal Reserve (Fed) rate hike in September. This shift in monetary policy expectations comes after a series of disappointing US economic releases, including a 0.6% decline in July's Retail Sales and a weak Nonfarm Payrolls report.

The accumulation of signs pointing towards a slowdown in the US economy is diminishing pressure on the Fed to raise interest rates further. The CME FedWatch tool now indicates a 70% chance that the Fed will keep interest rates steady at its September meeting, up from 48% a week earlier. This adjustment softens the US Dollar, supporting Silver, whose value is denominated in US currency.

Investors remain vigilant about geopolitical tensions, particularly in the Middle East, which could affect oil prices and potentially trigger inflation, limiting the Fed's accommodative stance. Market focus now shifts to the Minutes of the July Federal Open Market Committee (FOMC) meeting, released on Wednesday, which may shed more light on the Fed's risk balance and determine whether the recent drop in rate hike expectations will persist.

In the one-hour chart, XAG/USD is trading at $66.36, maintaining a bullish outlook as it stays above both the 100-period and 200-period simple moving averages. The metal also respects an ascending trend-line support from $63.51, now intersecting near $65.38, adding to the positive outlook. The Relative Strength Index (RSI) is at 65, indicating strong but not extreme upside momentum.

The next resistance level is $66.80, where profit-taking could occur. Support is expected at $65.38, followed by the 100-period SMA at $65.14. If prices retreat further, horizontal support at $64.25 and the 200-period SMA at $64.04 would become key points to watch. Analyst Ghiles Guezout provides this market analysis, which also covers GBP/USD's rise to fresh three-month highs around 1.3570 and the modest retreat of EUR/USD around 1.1600, both influenced by fading expectations of a Fed rate hike and the weakening US Dollar.

Gold prices surpassed $4,400 per troy ounce for the second consecutive day, supported by persistent US Dollar weakness and the reduced likelihood of further Fed tightening. Bitcoin (BTC) increased slightly to $63,500, buoyed by improving risk sentiment despite minor institutional outflows. Economists largely expect the Fed to maintain interest rates unchanged in September and throughout the year, according to a Reuters poll conducted between August 12 and 17.