Silver Price Forecast: False Breakout and Hawkish Fed Weigh on Silver/USD

Silver prices quickly retreated after hitting a cyclical high on Friday, currently trading near $67.78. Earlier, Federal Reserve Chair Kevin Warsh signaled a hawkish stance in his Jackson Hole speech, pushing US Treasury yields higher and exerting direct pressure on silver as a non-yielding asset, causing prices to slide notably from the highs.

**Hawkish Signals Dominate Short-Term Sentiment**

The Fed decided last week to hold its benchmark interest rate unchanged in the 3.50%-3.75% range, but Warsh's economic projections and comments at his first chaired meeting were unexpectedly hawkish. Market reports indicate that futures traders have fully priced in a 25-basis-point rate hike at the September meeting, with some traders even anticipating tightening as early as next month. This policy outlook has significantly diminished silver's appeal, extending its decline during the Asian session.

**Easing Geopolitical Tensions Curb Safe-Haven Buying**

On the other hand, progress in US-Iran peace talks has somewhat alleviated market inflation concerns and weakened silver's safe-haven demand. According to reports on Tuesday, comments by US Vice President JD Vance helped cool tensions. This factor, combined with the Fed's hawkish stance, jointly suppressed silver's rebound momentum.

**Technical Picture Faces False Breakout Risk**

On the charts, silver's brief surge followed by a sharp pullback has formed a false breakout pattern common in technical analysis. The market had previously anticipated that silver needed to break and hold above key resistance to challenge higher ranges, but current price action suggests heavy selling pressure overhead. Until the Fed's policy path becomes clearer, silver may continue to consolidate near recent lows, with bulls needing to watch for further downside correction risks.