Silver Prices Forecast: Higher Amid Dollar Weakness, Fed Rate Decision

Silver Prices Edge Higher Amid Dollar Softness Ahead of Fed Meeting

Silver prices are inching higher on Monday, supported by a softer U.S. dollar, while investors await insights from the Federal Reserve’s policy meeting and upcoming U.S. non-farm payrolls data.

At 12:46 GMT, XAG/USD is trading $27.22, flat.

Market Overview

Last week saw silver experiencing a 2.2% decline amid easing tensions in the Middle East and diminishing expectations for early U.S. interest rate cuts this year. Currently, investors anticipate only a single cut, likely in November, according to the CME’s FedWatch tool.

Treasury Yields and Dollar Movement

U.S. Treasury yields saw a decline on Monday as investors awaited the Federal Reserve’s policy meeting and key economic data releases scheduled for the week. Market attention is focused on the Federal Reserve’s meeting, scheduled to commence on Tuesday, concluding with an interest rate decision and a press conference on Wednesday.

Focus on Federal Reserve and Economic Data

While market consensus leans towards unchanged interest rates, investors are keenly watching for policy guidance from the central bank. Questions linger about the number of anticipated rate cuts this year and the possibility of none occurring. Recent economic data indicates resilience in the economy and persistent inflationary pressures.

Market Expectations

The Federal Reserve’s May 1 policy review remains the prime focus for markets this week. With expectations of a delay in rate cuts following sticky U.S. inflation, markets are on alert for any interventions by Japanese authorities to contain the yen’s recent decline.

Silver Market Outlook

Silver bulls have capitalized on last week’s dip, maintaining an elevated long position established at lower levels. Despite the recent pullback, silver had reached a multi-year high of $29.80 on April 12, fueled by robust purchases from central banks and demand from Chinese retail investors amidst a weaker yuan.

As traders maneuver through market uncertainties, close attention to the Federal Reserve’s communication and upcoming economic data will be essential in determining the near-term path of silver prices.

Silver (XAG/USD) prices are consolidating for a fifth day as traders await the next catalyst that could drive the market to retest its recent multi-year high at $29.80 or plunge it into the 50-day moving average at $25.48.