XAG/USD remains above $59.00 amid dovish Fed remarks

• Silver gained as New York Fed President Williams signaled only one more rate hike before capping increases through 2027.
• The CME FedWatch Tool indicates around a 77% chance rates remain unchanged this month, but an 88% likelihood of a December hike.
• Oil prices rose as escalating conflicts between Saudi Arabia and Houthi rebels heightened Middle East supply disruption fears.

Silver price (XAG/USD) gains ground after two days of losses, trading around $59.20 per troy ounce during Asian hours on Wednesday. Non-yielding Silver gains following dovish remarks from New York Federal Reserve President John Williams. Speaking on Tuesday, Williams noted that while he maintains his view that one more rate hike may be appropriate this year, he does not foresee additional rate increases in 2027.

CME FedWatch Tool suggests that markets are currently pricing in roughly a 77% probability that the Fed will leave interest rates unchanged this month, while assigning an 88% chance of a rate hike in December.

Market focus now shifts to the US September CPI inflation data scheduled for release later in the North American session, which could offer clearer direction on the Federal Reserve’s (Fed) monetary policy path. Headline US CPI is expected to show a year-over-year rise of 3.6% in September, up from 3.4% in August. Core CPI, which excludes volatile items, is projected to increase to 2.5% year-over-year from 2.4% in the previous month.

Geopolitical tensions remained a key focus as oil prices extended their gains amid escalating hostilities between Saudi Arabia and Iran-backed Houthi rebels, intensifying concerns over potential Middle East supply disruptions.

Energy complex stays resilient as tanker attacks escalate

According to TD Securities, “strength across the energy market is hard to shake as tanker attacks escalate,” underscoring the firm’s view that ongoing security risks are helping to sustain robust pricing across the oil complex rather than allowing any meaningful easing in market tensions.

Adding to the cautious global sentiment, the International Monetary Fund (IMF) warned of significant risks to international economic growth and financial stability. The organization highlighted threats stemming from a potential slowdown in the AI investment boom, mounting debt levels, and a prolonged conflict in the Middle East.

AI and semiconductor demand stay resilient despite looming slowdown

Economists at DBS highlight that, despite a more challenging financing backdrop, there is still “limited evidence of a significant slowdown in AI investment or semiconductor demand.” They point out that hyperscaler capital expenditure has “maintained robust yoy growth through 2Q,” underscoring the strength of current AI-related spending. However, DBS also notes that this pace is unlikely to be sustained indefinitely, citing Bloomberg forecasts that growth is set to “moderate from 95% this year to 39% in 2027,” suggesting a gradual normalization in the AI and semiconductor investment cycle over the medium term.

Technical Analysis:

In the daily chart, XAG/USD trades at $59.20, extending a bearish near-term tone as it holds beneath both the nine- and 50-period Exponential Moving Averages (EMAs). The pair’s slide below these trend references suggests that rallies are likely to be capped by overhead supply, while the 14-day Relative Strength Index (RSI) at 38.87 stays below the midline, hinting at lingering downside pressure rather than a decisive oversold rebound.

On the topside, initial resistance emerges at the short-term nine-period EMA near $60.21, with a stronger barrier at the 50-period EMA around $62.99, where sellers may reassert control if prices attempt a recovery. With no clear nearby structural support indicated, the metal appears vulnerable to further weakness until buyers can reclaim at least the $60.21 level, which would be the first step toward easing the current bearish bias.

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