Key Takeaways:
- Silver prices declined by 2.2% last week due to easing tensions in the Middle East and reduced expectations of early U.S. interest rate cuts.
- Investors anticipate only a single interest rate cut, likely in November, according to the CME’s FedWatch tool.
- Market focus is on the Federal Reserve’s policy meeting this week, where interest rate decisions and economic data will be key.
- Despite recent economic data showing resilience and inflationary pressures, uncertainty remains about the number of rate cuts expected this year.
- The Federal Reserve’s May 1 policy review will be a major event for markets, with expectations of a delay in rate cuts after sticky U.S. inflation.
Market Overview
Last week, silver prices experienced a 2.2% decline due to easing tensions in the Middle East and reduced expectations for early U.S. interest rate cuts. Investors are now anticipating only a single cut, likely in November, according to the CME’s FedWatch tool.
Treasury Yields and Dollar Movement
U.S. Treasury yields decreased on Monday as investors awaited the Federal Reserve’s policy meeting and key economic data releases scheduled for the week. The focus is on the Federal Reserve’s meeting starting on Tuesday, with an interest rate decision and a press conference on Wednesday.
Focus on Federal Reserve and Economic Data
While the market expects unchanged interest rates, investors are watching for policy guidance from the central bank. Uncertainties remain about the number of expected rate cuts this year and the potential for no cuts. Recent economic data suggests the economy’s resilience and persistent inflationary pressures.
Market Expectations
The Federal Reserve’s May 1 policy review is the highlight of this week for markets. With expectations of a delay in rate cuts following sticky U.S. inflation, market participants are monitoring possible interventions by Japanese authorities to stabilize the yen’s recent decline.
Silver Market Outlook
Despite last week’s dip, silver bulls have maintained an elevated long position established at lower levels. Silver reached a multi-year high of $29.80 on April 12, driven by strong purchases from central banks and demand from Chinese retail investors amidst a weaker yuan. As traders navigate uncertainties, closely monitoring the Federal Reserve’s communication and upcoming economic data will be crucial in determining the near-term direction of silver prices.