The Silver (XAG/USD) edges lower for the second consecutive day on Thursday, retreating from a fresh multi-year high of $37.32 touched on Wednesday, as traders lock in profits following the Federal Reserve's (Fed) cautious policy pause.

The Fed held rates steady but signaled that borrowing costs may remain elevated for longer, giving the US Dollar some breathing room and weighing slightly on precious metals.

At the time of writing, XAG/USD is down about 1.10% on the day as the metal backs away from its highest level since 2012, drifting lower during the American session to trade near $36.35.

This cooling comes after an impressive rally fueled by a mix of structural supply tightness, elevated safe-haven demand, and a broadly softer US Dollar. Heightened tensions between Israel and Iran have kept geopolitical risks on the radar, prompting steady haven flows into Silver alongside Gold.

The latest retreat primarily reflects healthy profit-taking and a modest rebound in the Greenback, as traders digest the Fed's cautious tone and recalibrate their near-term risk appetite. Despite the dip, the white metal remains up sharply for the month and continues to hold a constructive technical bias.

On the macro front, Silver remains underpinned by strong industrial demand, especially from solar panels and electric vehicles, which has kept the global market in deficit for a fifth straight year.

According to recent reports, 2025 is expected to see a supply shortfall of over 110 million ounces one of the widest in a decade lending solid fundamental support for prices on dips.

Source: Fxstreet