Silver Price Forecast: XAG/USD juggles around $28 as investors await Fed policy announcement

• Silver price hovers around $28.00 with Fed policy meeting in focus.
• The Fed is expected to cut interest rates in September.
• Renewed risks of Middle East tensions improve safe-haven appeal.

Silver price (XAG/USD) trades in a tight range near $28.00 in Monday’s North American trading session. The white metal stays on the sidelines with a focus on the Federal Reserve’s (Fed) monetary policy decision, which will be announced on Wednesday.

The precious metal steadies amid firm speculation that the Fed will deliver a dovish guidance on interest rates with an unchanged decision leaving them at their current level for the eighth time in a row. The Fed is expected to acknowledge that inflation has returned to the path of 2% with some progress and will highlight upside risks to labor market conditions.

Meanwhile, renewed risks of widening Middle East woes have also offered a temporary cushion to the Silver price. The precious metals, such as Gold and Silver, tends to perform better amid geopolitical uncertainty. The safe-haven appeal of the US Dollar (USD) has also improved. The US Dollar Index (USD), which tracks the Greenback’s value against six major currencies, jumps to a fresh two-high high to near 104.70.

10-year US Treasury yields slump to 4.18% on expectations that the Fed will start reducing interest rates from the September meeting. Lower yields on interest-bearing assets reduces the opportunity cost of holding an investment in non-yielding assets, such as Silver.

Silver technical analysis

Silver price weakens after a breakdown of the Double Top formation below June 26 low near $28.60 on a daily timeframe. A breakdown of the aforementioned chart pattern results in a bearish crossover. The Silver price is expected to find a temporary cushion near the 200-day Exponential Moving Average (EMA), which trades around $26.86.

The 14-day Relative Strength Index (RSI) shifts into the bearish range of 20.00-40.00, suggesting that a bearish momentum is intact.

Silver daily chart