Silver Price Forecast: XAG/USD Slides Toward $70.50 as Fed Rate Hike Expectations Strengthen

Silver remains under pressure as investors increasingly price in a more hawkish Federal Reserve outlook, reducing demand for precious metals. Fed Chair Kevin Warsh reinforced this view by emphasizing that maintaining price stability remains the central bank’s primary objective, signaling that policymakers may be prepared to keep interest rates elevated for longer if inflation remains persistent.

Meanwhile, geopolitical tensions eased after the United States and Iran signed an initial agreement that launches a 60-day negotiation period aimed at reaching a comprehensive peace deal. The diplomatic progress has improved market sentiment and reduced some safe-haven demand for silver, adding to the downside pressure on the metal.

Silver (XAG/USD) remained under selling pressure for a third consecutive session on Friday, slipping to around $64.40 during Asian trading hours. The precious metal continued to weaken as investors adjusted to a more hawkish Federal Reserve outlook, which has increased expectations that US interest rates could remain elevated for longer. Higher borrowing costs typically weigh on non-yielding assets such as silver by raising the opportunity cost of holding them.

During his first press conference as Fed Chair, Kevin Warsh reaffirmed that maintaining price stability remains the central bank’s top priority. While the Federal Open Market Committee (FOMC) unanimously decided to keep interest rates unchanged at 3.5%–3.75%, policymakers delivered a hawkish message, with nearly half of committee members indicating that additional rate increases may still be necessary before the end of the year.

Although the recent US-Iran peace initiative helped ease inflation concerns by pushing oil prices lower, its positive impact on silver has been overshadowed by expectations of tighter monetary policy. According to reports, Washington and Tehran signed a preliminary agreement that initiates a 60-day negotiation period aimed at securing a comprehensive peace settlement.

Further supporting market optimism, the US military announced the end of its blockade of Iranian ports near the Strait of Hormuz, allowing oil shipments to resume through one of the world’s most important energy corridors. While these developments have improved risk sentiment and supported higher-risk assets, investors remain cautious, recognizing that global shipping and energy markets may require several months to fully recover from the disruptions caused by the conflict.