During Wednesday’s European trading session, silver prices (XAG/USD) hovered below the significant resistance level of $31.00. Market participants are adopting a cautious stance as they await the Federal Reserve’s (Fed) monetary policy announcement, scheduled for 18:00 GMT.
The Fed is expected to announce its first interest rate reduction in over four years, driven by concerns over declining labor market conditions. Despite these worries, the central bank remains optimistic that inflation will return to its 2% target.
Investors are particularly interested in the anticipated scale of the rate cut. The CME FedWatch tool indicates that there is a 65% chance the Fed will lower rates by 50 basis points to a range of 4.75%-5.00%, with the remaining expectations leaning towards a 25-bps reduction. In addition to the rate cut, market attention will be on the Fed’s updated dot plot and economic forecasts.
Ahead of the Fed’s decision, the US Dollar Index (DXY), which measures the value of the dollar against six major currencies, has slipped to around 100.80. Conversely, yields on 10-year US Treasury bonds have risen to approximately 3.67%. A substantial rate cut by the Fed could exert downward pressure on both the US Dollar and bond yields.
