Silver prices (XAG/USD) remained stable near $28.00 during Monday’s North American trading session, as market participants await the Federal Reserve’s (Fed) monetary policy announcement scheduled for Wednesday.
The white metal’s stability reflects ongoing speculation that the Fed will maintain its current interest rate level for the eighth consecutive meeting. Analysts anticipate a dovish tone in the Fed’s guidance, acknowledging recent progress in inflation towards the 2% target while also addressing potential upside risks in labor market conditions.
In addition to Fed-related anticipation, silver has found some support from heightened geopolitical risks in the Middle East. The precious metal, along with gold, typically benefits from geopolitical uncertainty as investors seek safe-haven assets. This environment has also bolstered the appeal of the US Dollar (USD), with the US Dollar Index (DXY) reaching a new two-decade high of approximately 104.70.
The 10-year US Treasury yields have dropped to 4.18%, reflecting expectations that the Fed will begin reducing interest rates in September. Lower yields on interest-bearing assets decrease the opportunity cost of holding non-yielding assets like silver, contributing to the metal’s steady performance.
Overall, silver’s tight trading range and steady performance are influenced by both the Fed’s anticipated policy decision and ongoing geopolitical uncertainties.
