• Silver price demonstrates caution around $80.50 ahead of the Fed’s monetary policy announcement on Wednesday.
• The Fed is anticipated to hold interest rates steady in the current range of 3.50%-3.75%.
• Heightened geopolitical tensions in the Middle East would continue supporting the Silver price.

Silver price (XAG/USD) trades cautiously around $80.50 during the European trading session on Tuesday. The white metal wobbles in a tight range as investors shift focus to the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.

The Fed is expected to leave interest rates unchanged in the current range of 3.50%-3.75% for the second time in a row amid heightened inflation expectations in the wake of rising oil prices due to conflicts in the Middle East.

According to the CME FedWatch tool, the Fed is also expected to hold interest rates steady for the next four meetings after Wednesday’s interest rate decision.

The scenario of the Fed avoiding any monetary policy adjustment for a longer period bodes poorly for non-yielding assets, such as Silver.

For more cues on the United States (US) interest rate outlook, investors will focus on the Fed’s dot plot and Chairman Jerome Powell’s press conference following the interest rate decision on Wednesday.

Meanwhile, ongoing conflicts between the US, Israel, and Iran are expected to continue offering support to the Silver. Brutal war between these nations is unlikely to de-escalate in the near term as Iran's new Supreme Leader, Mojtaba Khamenei, has rejected peace proposals in the foreign policy session during the day, Reuters reports.

Theoretically, safe-haven assets, such as Silver, perform strongly in a heightened geopolitical environment.

Silver technical analysis

In the 4-hour chart, XAG/USD trades in a Descending Triangle chart pattern around $80.50, which signifies a sharp volatility contraction. The downward-sloping border placed from the March 1 high at $96.62 is capping the upside near $84.00. Meanwhile, the downside has been limited by the horizontal support plotted from the March 3 low around $78.00.

The near-term bias is bearish as price holds beneath the 20-period Exponential Moving Average, which is rolling over near $81.80. The series of lower highs from above $96.00 reinforces a downside structure, while the 14-period RSI wobbles near 40s shows persistent weak momentum without oversold relief, keeping selling pressure in control.

Initial resistance is located at the 20-period EMA near $81.80, followed by the downward-sloping border around $84.00. A sustained break above the latter would challenge the bearish bias and open the way toward the $86.00 area. On the downside, immediate support emerges at $79.00, ahead of the recent trough near $78.50, where a pause in downside momentum would be expected if the RSI dips closer to oversold territory.

(The technical analysis of this story was written with the help of an AI tool.)