Fed’s rate decision could cause market volatility
The policy announcement of the Federal Reserve later today is the primary market catalyst. The central bank is generally expected to keep rates stable at 4.25%-4.50%, but traders will investigate the press conference of Fed Jerome Powell and the updated economic projections for policy signals. The most important question is whether the prospects of the FED support the rate reductions later this year or indicates a long -term high speed environment.
The CME Fedwatch tool indicates a 98% chance of a rate reduction in June, but the concern remains about inflation and trade-related price pressure. If Powell takes on a more ragged tone, strengthening a wait-and-see approach to speed reductions, bond returns can rise and the US dollar can possibly strengthen silver prices.
Geopolitical and inflatory risks support silver
In addition to the FED, the inflation risks remain increased, partly due to renewed trade tensions. Former President Donald Trump’s proposed rates, which is expected to come into force in April, could stimulate inflation higher, which will complicate the policy views of the FED. At the same time, escalating geopolitical risks, in particular renewed conflicts in the middle, keep careful investors. These factors continue to support the demand for safe haven for precious metals.
Market forecast: silver faces with fed volatility
The Rally of Silver seems stretched, making it vulnerable to a withdrawal if the Fed means a slower path to assess the cuts. If Powell patience emphasizes on the monetary relaxation, the dollar could strengthen, so that a downward pressure on silver is exerted. Conversely, a Dovish -Fed -Tone – which relaxes later this year – can donate the renewed purchase interest of fuel.
Traders must brace themselves for volatility after the FED decision, where silver will probably respond sharply to any surprises in Powell’s message.
More information in our economic calendar.