Silver price falls as Fed tightening bets, US-Iran talks curb safe-haven demand

Silver prices continued to fall on Wednesday, reaching around $65.20 per ounce, marking a 2.80% decline for the day. The appreciation of the US Dollar and the anticipation of aggressive interest rate hikes by the Federal Reserve (Fed) were the primary drivers behind the silver market's downturn. The US central bank increased its benchmark interest rate by 25 basis points during the September meeting, setting the target range at 3.75%-4%, with further hikes potentially occurring before the end of the year.

Several Fed officials, including St. Louis Fed President Alberto Musalem and Chicago Fed President Austan Goolsbee, have expressed support for additional rate hikes amid persistent inflation concerns. This hawkish outlook from the Fed adds to the opportunity cost of holding non-yielding assets like silver, as investors await the release of preliminary US Purchasing Managers Index (PMI) data.

Geopolitical developments in the Middle East, specifically between the United States and Iran, have provided less support to precious metals, as reports of fruitful indirect talks between US and Iranian representatives indicate potential diplomatic progress. However, tensions are far from resolved, with ongoing negotiations and new US sanctions against Iranian aviation taking effect on Wednesday.

Technical analysis indicates that silver is currently trading below key moving averages and facing resistance at $65.80, with support at $65.07 and a lower floor near $64.56. The Relative Strength Index (14) suggests a bearish momentum, reinforcing the likelihood of further downward pressure on the metal.