• Silver sits near one-year lows as the Fed kept interest rates steady while offering limited forward guidance.
• Fed kept interest rates steady at 3.75%–4.00%, pointing to ongoing expansion in overall economic activity.
• Fed Chair Warsh reaffirmed commitment to 2% inflation and price stability, emphasizing that the economy remains strong.

Silver price (XAG/USD) extends its losses for the second successive day, trading around $53.30 per troy ounce during Asian hours on Thursday. Silver remains anchored near one-year lows following the US Federal Reserve’s decision to hold interest rates steady, as market participants had widely anticipated. The precious metal continues to face downward pressure as the central bank offered limited guidance regarding the timing and trajectory of its next policy move.

The Federal Reserve held interest rates steady at 3.75%–4.00%, noting that economic activity continues to expand. In its statement, the Fed highlighted resilient domestic spending, robust capital investment, and strong productivity growth. Addressing its employment mandate, the central bank observed that job gains have kept pace with the workforce while the unemployment rate has shown little change.

On the inflation front, the Fed acknowledged that price pressures remain elevated, but it chose to pause further rate hikes to gather additional data and assess the appropriate monetary policy stance. The decision was not unanimous, as Fed Governor Lisa Cook and Cleveland Fed President Beth Hammack dissented in favor of an immediate rate increase.

Fed Chair Kevin Warsh reaffirmed the Federal Open Market Committee’s commitment to delivering price stability and achieving its 2% inflation target, emphasizing that the underlying economy remains strong. Warsh also outlined future scheduling for monetary policy, noting that the Fed will hold eight meetings next year, including one without a formal vote, and that he anticipates six policy-setting meetings in 2028.

Traders are now turning their attention to the upcoming US Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred inflation metric, for clearer signals on the future trajectory of monetary policy.

Meanwhile, market participants are monitoring renewed diplomatic initiatives aimed at preventing further escalation of conflict in the Middle East. Despite these diplomatic efforts, persistently elevated oil prices continue to fuel inflation concerns and bolster expectations of prolonged high interest rates. This environment of higher borrowing costs presents a challenging backdrop for Silver, as rising yields and persistent rate pressure tend to weigh on non-yielding precious metals.

Systematic flows rotate out of Silver into base metals

According to TD Securities, recent systematic activity has seen Commodity Trading Advisors adjust their exposure across the metals complex, with the bank noting that “in metals markets, CTAs are sellers of silver and buyers of zinc and lead on the day.” This shift underscores the divergence between precious and base metals in current positioning flows, as investors trim silver while selectively adding to industrial metals such as zinc and lead.