Fed rate hike expectations rise and US dollar strengthens, silver drops to over six-month low

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新浪财经2026/06/24 07:16

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By:新浪财经

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Fed rate hike expectations rise and US dollar strengthens, silver drops to over six-month low image 0

Source: Huitong Finance

Spot Silver

(XAG/USD) continued to come under downward pressure during Wednesday's Asian trading session, with prices falling as low as around $60.74, marking the lowest level since December last year. As the market reassesses the outlook for Federal Reserve monetary policy, the precious metals market as a whole is facing significant selling pressure, with silver proving especially weak.

Overall, the precious metals market is under significant selling pressure, with silver's performance particularly sluggish.

The core factor behind the recent decline in silver lies in the notable shift in US interest rate expectations. At the initial stage of the Middle East tensions, the market once expected the Federal Reserve might cut rates within the year to alleviate growth pressure. However, as inflation risks stemming from rising energy prices have continued to ferment and US economic data remains strong, market expectations have seen a marked turnaround.

Now, investors generally believe that the Fed will not only find it hard to cut rates but may even consider further hikes. According to CME FedWatch Tool data,

the market now estimates the probability of a Fed hike in December is close to 86%

, a significant revision from previous expectations. This change in policy outlook directly hits the appeal of non-interest-bearing assets such as silver.

In theory, rising rates mean higher opportunity costs for holding precious metals. Since silver itself does not deliver a fixed return, when bond yields and money market rates keep rising, some capital tends to flow out of precious metals and into higher yielding dollar assets. At the same time,

the US Dollar Index

remains strong and continues to intensify silver's decline. Currently,

the US Dollar Index

has climbed to around

101.50

, the highest in more than a year. A rising dollar usually makes dollar-denominated commodities

more expensive for overseas investors, thereby weakening market demand.

Analysts suggest that the precious metals market now faces a double whammy. On the one hand, the Fed’s hawkish expectations push up real interest rates; on the other hand,

the ongoing strength of the US Dollar Index erodes the strategic value of precious metals. With no obvious flight-to-safety demand, silver’s short-term price trend remains weak. The market’s next focus will turn to Thursday’s release of the US May Personal Consumption Expenditures Price Index (PCE). As the Fed’s most-watched inflation gauge, core PCE is expected to rise from the previous 3.3% to 3.4%

. Should the data beat expectations, bets on a rate hike could increase further, putting additional pressure on silver; conversely, if inflation shows signs of cooling, it could offer the metals a short-term reprieve.

In addition, the outlook for industrial demand is equally worth noting. Silver enjoys both precious and industrial metal properties, so global manufacturing activity changes will directly impact its long-term demand. While the US economy remains on an expansion path, some major economies still show weak growth momentum, which also limits the improvement in silver demand.

From a daily chart perspective, silver has already broken below its previous key consolidation level and continues to drift further from the 20-day exponential moving average. Currently, the 20-day EMA stands at

around $68.09

, posing a distinct resistance to price. The overall moving average system presents a bearish layout, signaling a shift to a downward mid-term trend. If price effectively breaks the $60.00 psychological level, it may further test the support region around $56.50; if that area fails to hold, there is potential to revisit the $50.00 psychological threshold.

From a 4-hour cycle perspective, silver has been moving within a downward channel recently, with rebound strength evidently lacking. The Relative Strength Index (RSI) now sits near 31, already close to oversold territory, showing pronounced short-term downside. However, oversold does not mean an immediate reversal—more likely, it points to a technical need for correction. On the upside, watch resistance near $63.00 and $68.09; only a sustained return above the 20-day EMA may relieve current bearish pressure. Before that, rebounds may still face selling on rallies.

Editorial Conclusion

The current silver market is facing the combined impact of rising Fed rate hike expectations and continued dollar strength, leading to accelerated outflows from precious metals. Although technical indicators are nearing oversold, and a short-term recovery is possible, the broader trend remains distinctly bearish. Going forward, the market’s key focus will be on US core PCE data, Fed policy statements, and

changes in the US Dollar Index

. If inflation data continues to exceed expectations, rate hike forecasts may strengthen further, keeping silver at risk of exploring lower levels; if inflation cools, silver prices could see a short-lived bounce.

Editor: Zhu Henan

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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Fed rate hike expectations rise and US dollar strengthens, silver drops to over six-month low

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