Silver Price Falls 2.4% as Fed Rate-Hike Bets Push XAG/USD Toward Key $62 Support

Silver prices came under renewed pressure on Monday as traders increased expectations for a Federal Reserve rate hike at this week’s policy meeting. Spot silver (XAG/USD) was trading around $63 and down roughly 2.4%, with a stronger US dollar and elevated Treasury yields weighing on the non-yielding precious metal.

The move comes ahead of the Federal Reserve’s September 15–16 meeting, which has become a major focus for precious-metals and currency markets after stronger US inflation data and another surge in oil prices increased concerns about persistent price pressures.

Fed Rate-Hike Bets Increase Pressure on Silver

According to the CME FedWatch Tool cited by FXStreet, traders were pricing in an 86% probability of a 25-basis-point Federal Reserve rate increase at the September meeting. Higher interest rates generally create a less favourable environment for silver because the metal does not generate interest income.

Expectations for tighter monetary policy strengthened following Friday’s US inflation release. Headline consumer prices increased 0.4% month-on-month in August, while core CPI rose 0.3%.

At the same time, sharply higher oil prices are adding another inflation risk. Brent crude moved above $107 as geopolitical tensions disrupted energy supplies, increasing concerns that higher fuel and transportation costs could keep inflation elevated.

Stronger Dollar Adds to Precious-Metal Pressure

The US dollar has also strengthened as investors prepare for the Fed decision. Reuters reported that the Dollar Index gained nearly 0.4% on Monday, reaching a two-week high as geopolitical uncertainty and rising oil prices increased demand for the US currency.

Because silver is priced in US dollars, a stronger dollar can make the metal more expensive for international buyers and reduce demand. Higher Treasury yields are creating an additional headwind for assets such as silver that do not provide a yield.

XAG/USD Tests Critical $62 Support

Beyond the fundamental pressure, silver’s technical structure has become increasingly important.

FXStreet reported that XAG/USD is testing the neckline of a bearish head-and-shoulders formation near $62, which is also close to the 50-day Simple Moving Average. A daily close below this area could confirm the bearish pattern and expose the metal to additional losses.

Momentum indicators also favour sellers. The Relative Strength Index was around 43, while the Moving Average Convergence Divergence indicator remained below its zero line.

Key Silver Levels to Watch

A sustained break below $62 could put the $60 psychological level into focus, followed by support around $55, according to the technical setup outlined by FXStreet.

However, a rebound above the immediate resistance zone could reduce the bearish pressure. A recovery toward the $66 area, followed by $70, would indicate that buyers are regaining control.

Fed Decision Could Set the Next Silver Move

The Federal Reserve decision will likely remain the dominant short-term catalyst for XAG/USD. A rate increase accompanied by hawkish guidance could keep the dollar and Treasury yields elevated, increasing pressure on silver.

Conversely, any indication that policymakers expect inflation to ease despite higher energy costs could trigger a recovery in precious metals.

Markets are therefore watching not only the September rate decision but also the Fed’s updated economic projections and guidance on future policy. Reuters reported that economists have increasingly shifted toward expecting a quarter-point hike, while markets were pricing close to a 90% probability of an increase.

For silver traders, the immediate battle is now around $62. A decisive break could accelerate the technical decline, while a successful defence of the level may give buyers an opportunity to stabilise prices ahead of the Fed announcement.