XAG/USD gains are limited by expectations of further Fed tightening despite a drop in oil prices easing inflation concerns.
Silver (XAG/USD) rose 1% to $58.20 but failed to sustain momentum above $58.68 as hawkish Federal Reserve expectations capped upside. The metal benefited from a sharp decline in oil prices after a ceasefire agreement between the US and Iran reduced global inflation fears.
Recent underperformance in silver stems from higher oil-driven inflation projections, which prompted central banks to tighten monetary policy. Non-yielding assets like silver face pressure in such environments. Analysts anticipate two additional 25bps Fed rate hikes this year, with a 64.5% chance of a hike next month.
Technical analysis shows XAG/USD trading below its 20-day Exponential Moving Average at $58.79, signaling near-term bearish momentum. The failure to reclaim this level suggests further upside may be limited.