Silver Gains 1.32% Ahead of Fed Rate Decision
Silver prices rose 1.32% on Wednesday as traders positioned ahead of the Federal Reserve's expected 25-basis-point rate hike.
Silver traded at $64.00 per troy ounce on Wednesday. The metal gained 1.32% during the session. This rebound follows recent losses in the market. Traders adjusted their positions ahead of the Federal Reserve's monetary policy decision. The meeting is scheduled for 18:00 GMT.
Markets expect a 25-basis-point interest rate increase. This move would set the federal funds target range at 3.75% to 4.00%. It would be the first hike by the US central bank since July 2023. Inflationary pressures remain persistent in the United States. Energy price shocks from the Middle East conflict contribute to these pressures.
Economic Data Supports Tightening Stance
US Retail Sales rose 1.2% month-over-month in August. This figure exceeded the expected 0.8% increase. It rebounded from a 0.5% contraction in July. The resilience of the US economy provides the Fed with room to tackle inflation. Strong consumer spending signals a durable economic environment.
Investors focus on the accompanying message rather than the hike itself. The monetary policy statement and updated economic projections are key. Fed Chairman Kevin Warsh will hold a press conference at 18:30 GMT. Markets will watch for signals on the future path of rates. A commitment to further tightening would impact asset prices.
Higher Yields Pressure Silver Prices
Higher interest rates act as a headwind for silver. The metal offers no yield. Rising rates support US government bond yields. This increases the opportunity cost of holding precious metals. The 10-year US Treasury yield trades around 5.00%. It reached 5.04% on Tuesday, its highest level since 2007.
The US Dollar remains firm ahead of the decision. A stronger dollar limits silver's upside. USD-denominated metals become more expensive for foreign investors. The CME FedWatch Tool shows a 79% probability of two hikes by year-end. This expectation keeps pressure on non-yielding assets.
Technical Levels Define Intraday Range
Silver trades at $64.46 on the one-hour chart. It holds above the 100-hour Simple Moving Average at $63.88. It remains below the 200-hour SMA at $65.18. This placement indicates a neutral intraday tone. The Relative Strength Index near 57 suggests mildly positive momentum.
Initial support appears at $64.30 and $63.95. Resistance aligns at $64.95 and $65.18. A higher barrier exists at $65.40. Silver must clear this supply zone to extend its recovery. According to GN auto markets/commodities: silver prices, the direction depends on the Fed's guidance. A lack of commitment to additional tightening could allow the rebound to continue.
