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Silver prices (XAG/USD) declined by nearly 2% on Thursday as the U.S. Dollar (USD) hit year-to-date highs, driven by the Federal Reserve's (Fed) hawkish stance. The Fed's projected rate hikes in 2026, supported by nearly half of its board members, have strengthened the Greenback, pressuring silver—a dollar-denominated commodity. Technically, the price remains below the 200-day Simple Moving Average (SMA), a critical bearish signal for trend-following traders.
The bearish momentum highlights the inverse relationship between the USD and silver. A sustained break below $61.50 could trigger further declines, testing key support levels. Traders should monitor the Fed's policy trajectory and inflation data, as these will dictate USD strength and silver's technical outlook. Additionally, geopolitical risks and industrial demand for silver could influence short-term volatility.
For MENA investors, the dollar's dominance in 2026 rate hike discussions underscores the need to hedge against currency fluctuations. Silver's performance may also impact Gulf-based precious metals portfolios. Key watchpoints include the 200-day SMA retest and the Fed's June policy meeting for clues on rate hike timing.
