Silver Price Forecast: XAG/USD slumps to near $30.30 amid uncertainty ahead of Fed policy meeting

• Silver price slumps to near $30.30 as investors turn cautious ahead of the Fed's policy meeting.
• Traders have fully priced in a 25-bps interest rate cut by the Fed.
• Economists see the Fed cutting interest rates three times in 2025.

Silver price (XAG/USD) falls to near $30.30 in the North American session on Wednesday. The white metal drops as investors turn cautious ahead of the Federal Reserve's (Fed) monetary policy announcement at 20:00 GMT.

According to the CME FedWatch tool, traders have priced in a 25-basis points (bps) interest rate reduction, which will push borrowing rates lower to 4.25%-4.50%. Therefore, investors will pay close attention to the Fed's dot plot, which shows where policymakers see Federal Fund Rates heading in the medium and long term.

A Bloomberg survey from December 6 to 11 showed that economists see the Fed reducing interest rates three times next year, assuming that progress in the disinflation process has slowed more than anticipated. The survey also indicated that economists have become more worried about upside risks to inflation than downside risks to employment, given incoming President-elect Donald Trump's policies, including mass deportations, higher import tariffs, and tax cuts.

Ahead of the Fed meeting, the US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, consolidates around 107.00. Meanwhile, 10-year US Treasury yields rise to nearly 4.40%. Higher yields on interest-bearing assets weigh on non-yielding assets, such as Silver, because they increase their opportunity costs.

Silver technical analysis

Silver price slides to a fresh two-week low near $30.20 on Wednesday. The white metal weakens after breaking below the 20-day Exponential Moving Average (EMA), which trades around $30.95.

The 14-day Relative Strength Index (RSI) oscillates inside the 40.00-60.00 range, suggesting a sideways trend.

Looking down, the upward-sloping trendline around $29.50, which is plotted from the February 29 low of $22.30 on a daily timeframe, would act as key support for the Silver price. On the upside, the horizontal resistance plotted from the May 21 high of $32.50 would be the barrier.

Silver daily chart