Silver Prices Trade Sideways Amid Fed Focus
Key Takeaways:
- Silver prices consolidate below $31.00 as investors await Fed rate cut decision.
- Markets anticipate Fed to reduce interest rates, with speculation growing for aggressive action.
- US Retail Sales data showed a modest growth of 0.1% in August, impacting the USD.
Fed Rate Cut Speculation
Silver price (XAG/USD) remains range-bound below the key resistance level of $31.00 during Tuesday’s North American trading session. Investor focus has shifted to the upcoming Federal Reserve’s monetary policy announcement scheduled for Wednesday.
Fed Rate Outlook
The Fed is expected to announce interest rate cuts, the first in over four years. Market participants are closely monitoring the anticipated size of the rate cut. According to the CME FedWatch tool, the probability of a 50 bps rate cut to 4.75%-5.00% in September has surged to 67%.
Market Speculation
Speculation around the Fed transitioning to aggressive policy normalization has grown following the release of softer-than-expected US annual Producer Price Index (PPI) data.
Impact on the USD
The US Dollar (USD) rallied after the release of August’s Retail Sales data, showing a surprising 0.1% growth. Economists had predicted a 0.2% decline in the key consumer spending metric.
USD Rebound
The US Dollar Index (DXY), tracking the USD against major currencies, bounced back near 101.00 after touching a year-to-date low near 100.50.
Technical Analysis for Silver
Silver price faces a significant test near $31.00 ahead of the Fed’s rate decision. A break above the September 16 high of $31.10 could trigger further upside momentum. The asset’s short-term outlook is positive as long as it holds above the 20-day Exponential Moving Average (EMA) around $29.30.
RSI and Momentum
The 14-day Relative Strength Index (RSI) is above 60.00, indicating the potential for bullish momentum if the oscillator remains above this level.
Silver FAQs
Silver is a frequently traded precious metal used by investors for various purposes. It is often seen as a store of value and a means of diversifying investment portfolios. Traders can acquire physical Silver or trade it through Exchange Traded Funds.