Silver Price Forecast: XAG/USD jumps to near $65 ahead of Fed’s interest rate decision

Silver price (XAG/USD) surged to approximately $64.80 during Wednesday's European trading session, shortly before the Federal Reserve's monetary policy announcement. Traders are increasingly confident that the Fed will raise interest rates by 25 basis points (bps) to 3.75%-4.00%. This optimism stems from a resilient US Consumer Price Index (CPI) report for August, released last week.

The outcome will depend on the Fed's monetary policy statement and remarks from Chair Kevin Warsh during the press conference. Warsh is unlikely to offer forward guidance on interest rates. The CME tool indicates a 79% chance that the Fed will enact at least two rate hikes by year-end. This outlook is favorable for US Treasury Yields, which have slightly decreased to around 5%, nearing their 19-year high of approximately 5.04% from Tuesday.

At present, XAG/USD is valued at $64.80, maintaining a slightly bearish short-term outlook as it trades below the 20-day Exponential Moving Average at $65.12. The metal has recently dipped beneath this short-term average after failing to sustain gains above a downward resistance trend line. The Relative Strength Index (RSI) around 49 suggests fading momentum and a lack of decisive buying pressure.