- Silver price moves sideways as traders adopt a cautious stance before FOMC Minutes for July’s policy decision.
- The downside of the non-yielding Silver could be restrained as the Fed could reduce rates by 100 basis points in 2024.
- The safe-haven Silver may face challenges as the US "bridging proposal" could narrow the gaps between Israel and Hamas.
Silver price (XAG/USD) price consolidates around $29.50 per troy ounce during the European hours as traders assess the upcoming release of the FOMC Minutes on Wednesday. The Fed's Meeting Minutes for July’s policy decision could provide crucial insights into the Federal Reserve's (Fed) monetary policy direction. Furthermore, traders would likely shift their focus on the Fed Chair Jerome Powell's upcoming speech at Jackson Hole on Friday.
The downside risk for non-yielding Silver is expected to be limited, as the Federal Reserve is anticipated to deliver 100 basis points (bps) in rate cuts by the end of this year. However, there is division among market analysts on whether the Fed will implement a 25 or 50 bps cut at its September meeting.
CME FedWatch Tool suggests that the markets are now pricing in a nearly 67.5% odds of a 25 basis points (bps) Fed rate cut in its September meeting, down from 76% a day ago. The probability of a 50 basis points rate cut fell to 32.5% from 53.0% a week earlier.
Federal Reserve (Fed) Governor Michelle Bowman expressed caution on Tuesday about making any policy changes, citing ongoing upside risks to inflation. Bowman warned that overreacting to individual data points could undermine the progress already achieved, according to Reuters.
The safe-haven appeal of Silver is expected to decrease as tensions in the Middle East ease. US Secretary of State Antony Blinken concluded a trip to the region aimed at facilitating a ceasefire in Gaza. According to Reuters, Blinken, along with mediators from Egypt and Qatar, has raised hopes for a US "bridging proposal" that could narrow the gaps between the conflicting parties in the 10-month-old war.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD consolidates recent gains to over one-month peak
AUD/USD extends its consolidative price move near a five-week peak set on Wednesday and continues to draw support from the divergent RBA-Fed policy outlook. Furthermore, the upbeat market mood seems to benefit the risk-sensitive Aussie amid the prevalent USD selling bias and hopes for additional economic stimulus from China.
USD/JPY holds positive ground above 145.00 despite firmer Fed rate cut expectations
USD/JPY trades on a stronger note around 145.35 during the early Asian session on Thursday. A record of Japan’s trade deficit data has dragged the Japanese Yen lower and supported USD/JPY. On Friday, traders will closely watch BoJ Governor Kazuo Ueda's speech and the Fed Chair Jerome Powell’s speech at Jackson Hole.
Gold consolidates near all-time peak amid Fed rate-cut optimism
Gold price holds above the $2,500 mark during the Asian session on Thursday and remains close to the all-time peak, though the upbeat market mood continues to act as a headwind. Traders also prefer to wait for Fed Chair Jerome Powell's speech on Friday.
GRIMACE meme coin suffers rug pull after promotion on hacked McDonald's Instagram account
McDonald's Instagram account suffered a hack on Wednesday after it promoted a Solana-based meme coin named after GRIMACE, one of its packaging characters. Following the hack, insider holders began to dump their tokens, driving the token's market cap from $20 million to $599K.
NFP revisions serve as another wake-up call for the Fed
Stocks stayed firmly in the green as the Fed minutes all but locked in a September rate cut, especially with recent inflation data paving the way. But the surprise cameo from the NFP revision stole the show.
Moneta Markets review 2024: All you need to know
VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.