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- Silver may stabilize amid bargain-hunting and declining crude oil prices.
- Security talks between Iran, Saudi Arabia, Pakistan, and Turkey temporarily soften near-term inflation concerns.
- Markets expect a Fed rate pause in October, alongside upcoming decisions from the ECB, BoJ, and BoC.
Silver price (XAG/USD) depreciates after posting minor gains in the previous day, trading around $53.80 per troy ounce during Asian hours on Tuesday. Non-yielding Silver is trading near an 11-month low of $53.01, recorded on Monday, as elevated energy prices keep inflation risks in focus, sustaining expectations for further monetary tightening. However, the downside pressure on the white metal could ease as falling oil prices and bargain-hunting ahead of the Federal Reserve’s (Fed) upcoming policy decision offer some support.
Crude oil prices have declined amid renewed diplomatic efforts to defuse US-Iran tensions, which has helped ease near-term inflation concerns. Following high-level talks in Tehran, Iran, Saudi Arabia, Pakistan, and Turkey agreed on Monday to continue security discussions and enhance regional cooperation, according to Islamic Republic of Iran Broadcasting (IRIB). A joint statement released after the initial meeting between Iran and senior officials representing the Mecca Joint Defence Agreement noted that all four countries agreed to maintain dialogue and consultations focused on regional peace, security, and stability.
In central banking, financial markets anticipate that the Federal Reserve will keep interest rates unchanged at its upcoming October meeting before potentially pursuing another rate hike in December. According to the CME FedWatch Tool, market pricing currently reflects an 89.5% probability of a rate pause in October, alongside an 82.3% chance of a rate increase in December. Meanwhile, the European Central Bank (ECB) and Bank of Japan (BoJ) are also set to leave their key interest rates unchanged, while the Bank of Canada (BoC) is expected to deliver a 25-basis-point rate hike this week.
Technical Analysis: Silver falls to near oversold territory
In the daily chart, XAG/USD trades at $53.80, maintaining a bearish near-term bias as price holds below both the nine- and 50-day Exponential Moving Averages (EMAs). The Moving Average Exponential structure suggests rallies are likely to be capped by these overhead levels, while the 14-day Relative Strength Index (RSI) at 31.06 hovers near oversold territory, hinting that downside momentum is stretched but not yet reversed. The FXS Fed Sentiment Index consolidating around 127.51 reinforces a cautious backdrop for silver amid tight monetary expectations.
On the topside, initial resistance is located at the nine-day EMA at $55.74, with a stronger barrier emerging at the 50-day EMA near $60.74, where a break would be needed to ease the prevailing bearish tone. With no clear technical support levels immediately beneath the current price in this dataset, the metal remains vulnerable to further declines until buyers can reclaim the short-term EMA cluster, which would be the first sign of stabilization on the daily chart.
