Silver (XAG) Forecast: Silver Rally Stalls as Fed Kills Rate Cut Hopes

Silver rallied into the announcement on the assumption that Warsh might come in softer than the committee. That bet lost. The projections made it clear that the entire committee moved hawkish, not just the statement language. Futures pricing now shows no cuts in 2026 and a quarter-point hike potentially arriving before December. That is a completely different rate landscape than what silver was trading on a week ago.
Warsh’s Longer View Did Not Save the Session
Warsh has argued publicly that supply-shock inflation should not drive monetary policy and that AI-driven productivity gains could create disinflationary pressure over time. Those views are still out there and silver bulls are going to cling to them. But Wednesday’s press conference did not deliver that version of Warsh.
ING strategist Michiel Tukker wrote, “Whilst the statement should turn more hawkish, Warsh may want to communicate his more dovish view, though probably not explicitly.”
Tukker may have been right about Warsh’s instincts but the statement and projections drowned out whatever dovish signal Warsh tried to thread through the press conference. The 2-year yield jumping 9 basis points tells you the bond market did not hear a dovish Fed Chair. It heard a committee that is done talking about cuts and starting to talk about hikes. Silver is not going to fight that until the data changes.
The Rally Had Support but Not Enough
Silver has been running on inflation concerns, geopolitical tension from the Iran situation, and strong demand for hard assets. Those factors have not disappeared. The Iran agreement is still unsigned, energy prices bounced Wednesday with WTI toward $77 and Brent near $79, and the inflation hedging bid has been real money.
But rate expectations just shifted hard against the metal. Silver can hold on geopolitical demand and inflation hedging for a while, but when the 2-year yield is ripping higher and the Fed is openly discussing the possibility of another hike, rallies become selling opportunities. That is the environment Warsh just created and the five-day counter-trend rally stalling at the Fibonacci rejection at $71.84 confirmed it technically.
What to Watch
The 200-day moving average at $68.72 is the line right now. Silver is sitting on it after Wednesday’s reversal and the next session tells you whether buyers are willing to defend it or whether the sell-off extends into the $66.53 to $65.34 zone. That support area could turn into a buying opportunity but only if the data starts softening enough to walk back the hawkish projections.
The Fed just told the market that inflation is the priority, growth is holding, and the labor market is not giving them a reason to ease. Until something in that picture breaks, silver rallies are going to run into selling. Warsh may eventually deliver the dovish pivot his history suggests, but Wednesday was not that day and the next few sessions are about finding out whether $68.72 holds or whether the counter-trend rally is completely unwound.
More Information in our Economic Calendar.
 

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