Silver surges as Treasury buyback plan sinks the US Dollar

Silver (XAG/USD) trades sharply higher on Wednesday, changing hands near $65.80. The metal is riding a broad rally across precious metals with Gold (XAU/USD) soaring toward $4,500.

The trigger was the United States (US) Department of the Treasury, which said it will increase, by at least double, the size of its liquidity support buyback operations for longer-dated coupon securities, effective September 9. The plan aims to rein in the recent surge in long-end yields, and it did just that.

The other set-piece of the session was the release of the July Federal Open Market Committee (FOMC) Minutes. The record showed policymakers still regard inflation as elevated, with the labor market stable and the economy expanding. It also confirmed the divergence at the meeting, where three officials, regional Fed Presidents Lorie Logan, Beth Hammack and Neel Kashkari, voted for a rate hike.

Even so, the Minutes did little to shift the mood. Traders treated them as backward-looking, since the debate they captured took place before softer July inflation data and a weak jobs report that showed a 23K fall in payrolls. Markets now price in only a 34% chance of a September rate hike, down from around 60% three weeks ago, with a hold the clear base case. That softer rate path keeps the backdrop friendly for metals.

Short-term technical analysis:

On the 4-hour chart, XAG/USD trades at $65.77, maintaining a bullish near-term bias as it holds above both the 20-period Simple Moving Average (SMA) at $64.84 and the 100-period SMA at $62.16. The configuration of these underlying averages suggests the uptrend remains supported, while the Relative Strength Index (RSI) near 58 stays in positive territory without reaching overbought conditions, hinting that bullish momentum is constructive but not stretched.

On the topside, immediate resistance appears at the horizontal barrier at $65.92, where a break would open the way for a continuation of the advance. On the downside, initial support is seen at $65.29, ahead of the 20-period SMA at $64.84, with deeper demand zones at $63.83 and $63.54, followed by the 100-period SMA near $62.16, which reinforces the broader bullish structure as long as it holds.

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