Key Takeaways:
- Investors are awaiting the Federal Reserve’s upcoming monetary policy decision and closely monitoring key US economic indicators like the ISM Manufacturing PMI and ADP Employment Change.
- The US dollar is maintaining an upward momentum due to the Fed’s hawkish stance on interest rates.
- Expectations for Fed easing have declined, reducing the likelihood of rate cuts in June and September.
- Geopolitical tensions, including Israeli attacks on Gaza and protests against Israel, are impacting market sentiment and precious metal prices.
Impact of Federal Reserve’s Monetary Policy Decision on Precious Metals
As investors eagerly anticipate the Federal Reserve’s upcoming monetary policy decision, they are also keeping a close eye on key US economic indicators such as the ISM Manufacturing PMI and ADP Employment Change. These factors have the potential to influence market sentiment and subsequently impact the prices of precious metals. The broad-based US dollar has been on the rise, reaching a weekly high of 106.40, fueled by the Fed’s hawkish stance on interest rates. The central bank is expected to maintain interest rates at their current levels during its upcoming meeting in May, with expectations for rate cuts in June and September dwindling.
Geopolitical Tensions and Silver Prices
On the geopolitical front, tensions are escalating as Israeli Prime Minister Benjamin Netanyahu announces plans for Israeli forces to enter Gaza’s southern city of Rafah, despite a ceasefire deal with Hamas. UN chief Guterres has expressed dissatisfaction with the slow progress on Gaza aid delivery, urging Israel to prioritize the safety of humanitarian workers. The International Court of Justice has rejected Nicaragua’s request for emergency measures regarding German arms sales to Israel. Protests against Israel’s attacks persist in the United States, resulting in over 900 arrests in the past 11 days. The death toll from Israeli attacks on Gaza since October 7 has surpassed 34,000 Palestinians killed and nearly 78,000 wounded. These geopolitical tensions are likely to have an impact on silver prices and market sentiment in the near-term.