Silver Price Forecast: XAG/USD hovers around $81.00 due to fading Fed rate cut bets

LONDON (March 17) Silver price (XAG/USD) remains subdued after registering modest gains in the previous session, trading around $80.80 per troy ounce during the early European hours on Tuesday. The non-yielding precious metals, including Silver, came under pressure as expectations for near-term Federal Reserve (Fed) rate cuts faded amid rising inflation concerns linked to the rising energy prices. The Middle East war is causing a surge in oil prices, which have heightened inflation fears, further diminishing prospects for near-term monetary easing.

Markets widely expect the US central bank to keep its benchmark interest rate unchanged in the 3.50%–3.75% range at Wednesday’s meeting, according to the CME FedWatch Tool. If the Fed holds rates steady, it would mark the second consecutive pause after the central bank’s previous easing cycle.

The Reserve Bank of Australia (RBA) raised the Official Cash Rate (OCR) to 4.10% from 3.85% at its March meeting on Tuesday, potentially becoming the first G10 central bank to resume tightening. Meanwhile, the Bank of Japan (BoJ) is widely expected to keep interest rates unchanged at 0.75% on Thursday.

Silver price received support as the US Dollar (USD) and Treasury yields eased on lower oil prices. Crude prices declined as several tankers safely navigated the Strait of Hormuz, while major economies are expected to release petroleum reserves to help offset potential supply disruptions.

US Treasury Secretary Scott Bessent said the United States is allowing Iran to continue shipping crude through the Strait of Hormuz, while President Donald Trump is seeking support from other countries to help safeguard commercial activity in the vital waterway.

FXStreet