Silver Price Forecast: XAG at Technical Crossroad as Powell’s Crucial Fed Meeting Approaches
Silver prices are about to enter a crucial week as traders balance growing geopolitical concerns against the next Federal Reserve meeting...
Quick overview
- Silver prices are at a critical juncture as traders assess geopolitical tensions and the upcoming Federal Reserve meeting.
- After a significant rally earlier this year, silver has seen a sharp decline, falling below $80 per ounce despite ongoing global instability.
- The Federal Reserve's upcoming meeting is crucial, as signals from Jerome Powell could influence silver's trajectory amid rising oil prices and inflation concerns.
- Technical indicators suggest that while silver's broader uptrend remains intact, the market may require consolidation before establishing a new trend.
Live SILVER Chart
Silver prices are about to enter a crucial week as traders balance growing geopolitical concerns against the next Federal Reserve meeting, where Jerome Powell’s policy signals could decide whether the metal continues its recent decline or restarts its ascent.
Silver’s Explosive Rally Loses Momentum
Silver experienced one of its most dramatic rallies in recent years, surging above $120 per ounce earlier this year as geopolitical tensions intensified in the Middle East. Investors initially rushed into precious metals as safe-haven assets amid escalating conflict involving Iran, Israel, and the United States.
At its peak, silver climbed to approximately $121.67 per ounce, fueled by expectations of prolonged global instability and heightened demand for safe-haven assets.
However, the rally proved short-lived. Prices reversed sharply, falling back below $80 per ounce despite ongoing geopolitical tensions. While silver initially attempted a rebound, sellers quickly returned to the market. When trading reopened at the start of the week, prices slipped below the $80 level again.
The decline surprised many market participants who expected rising geopolitical risks to continue supporting precious metals.
Geopolitical Tensions Continue to Drive Market Volatility
Escalating tensions in the Middle East remain a major factor shaping global financial markets.
Reports indicate that the United States is preparing a multinational naval coalition to escort ships through the Strait of Hormuz, a critical global energy shipping route. The move reflects growing concerns about potential disruptions to oil supply linked to tensions involving Iran.
President Donald Trump has also reportedly urged several countries, including China, to assist in maintaining safe passage through the strategic waterway.
Despite these developments, precious metals have struggled to maintain upward momentum as investors increasingly shift toward the U.S. dollar during periods of global uncertainty.
Oil at $100 Complicates the Economic Outlook
Energy markets have added another layer of complexity to the global economic environment.
Prices for West Texas Intermediate crude oil have surged above $100 per barrel, raising concerns that inflation pressures could remain elevated.
Higher energy costs tend to feed through to transportation and production expenses, potentially keeping inflation above central bank targets.
At the same time, the latest labor market data shows signs of weakening economic momentum. The February jobs report indicated that the U.S. economy lost around 92,000 jobs, pushing unemployment to 4.4%.
Meanwhile, core inflation remains near 2.5%, still high enough to complicate the Federal Reserve’s policy outlook.
This unusual combination of rising energy prices, slowing job growth, and persistent inflation has created a difficult environment for policymakers.
The Federal Reserve Meeting Takes Center Stage
The upcoming Federal Open Market Committee meeting on March 18 is expected to be the most important event for precious metals markets this week.
Investors will closely analyze the Federal Reserve’s updated economic projections and the widely watched “dot plot,” which outlines policymakers’ expectations for future interest rate moves.
This meeting is particularly significant because it will be one of the final policy gatherings chaired by Jerome Powell before the end of his term in May.
Silver’s relationship with monetary policy is closely tied to interest rates and the strength of the U.S. dollar.
Lower interest rates generally weaken the dollar and reduce real yields, which tends to support precious metals. In contrast, higher interest rates or hawkish policy signals typically strengthen the dollar and increase real yields, creating headwinds for silver.
Technical Structure Signals Buyer Resilience
From a technical perspective, silver’s broader uptrend has not been invalidated. The break below $64 in early February was significant, but the decline was ultimately contained by key moving averages. Support emerged at the stronger buying interest around the 20 SMA (gray) on the weekly chart.
That support has been holding after several attempts. Buyers stepped in decisively, and silver rebounded sharply, climbing back above $96, but the price reversed back down and sellers are testing that indicator again.
If the market continues to unwind speculative positions, silver could face further short-term consolidation or deeper pullbacks before establishing a new trend.
Silver Chart Weekly – The 20 SMA Held As Support
However, the trend still remains upward, with the 20 SMA acting as support. Key resistance levels now sit near $100, followed by the prior highs around $117–$121. On the downside, initial support is defined by the recent lows near $69 and $64 if the 20 SMA breaks.
Two Possible Scenarios for Silver
The Federal Reserve’s message this week could significantly influence silver’s next move.
If Powell emphasizes that rising oil prices and persistent inflation require a cautious approach, markets may interpret this as a signal that interest rates will remain elevated for longer. In that scenario, the U.S. dollar could strengthen further, potentially putting additional pressure on silver prices.
However, if Powell highlights the weakening labor market and signals that the Fed still expects to cut interest rates later in 2026, silver could quickly regain upward momentum.
The recent jobs data provides policymakers with some flexibility to acknowledge slowing economic conditions while maintaining a careful approach to inflation risks.
Dollar Strength Adds Additional Pressure
Currency movements are also influencing silver’s performance.
A stronger U.S. dollar tends to reduce the attractiveness of dollar-denominated commodities for international buyers, which can limit demand.
Although long-term structural demand for silver remains strong—supported by both industrial usage and investment demand—the recent rally may have moved too quickly. Profit-taking, currency strength, and extreme volatility have combined to trigger a sharp correction.
Outlook: Silver now finds itself at a critical turning point.
The metal remains supported by geopolitical uncertainty and long-term industrial demand, but short-term price action suggests the market may need a period of consolidation after its explosive rally.
The Federal Reserve’s policy signals this week could determine whether silver stabilizes and resumes its upward trend—or whether the correction continues in the near term.
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