Silver Prices Forecast: Higher Amid Dollar Weakness, Fed Rate Decision

Market Overview

Last week saw silver experiencing a 2.2% decline amid easing tensions in the Middle East and diminishing expectations for early US interest rate cuts this year. Currently, investors anticipate only a single cut, likely in November, according to the CME’s FedWatch tool.

Treasury Yields and Dollar Movement

US Treasury yields saw a decline on Monday as investors awaited the Federal Reserve’s policy meeting and key economic data releases scheduled for the week. Market attention is focused on the Federal Reserve’s meeting, scheduled to commence on Tuesday, concluding with an interest rate decision and a press conference on Wednesday.

Focus on Federal Reserve and Economic Data

While market consensus leans towards unchanged interest rates, investors are keenly watching for policy guidance from the central bank. Questions linger about the number of anticipated rate cuts this year and the possibility of none occurring. Recent economic data indicates resilience in the economy and persistent inflationary pressures.

Market Expectations

The Federal Reserve’s May 1 policy review remains the prime focus for markets this week. With expectations of a delay in rate cuts following sticky US inflation, markets are on alert for any interventions by Japanese authorities to contain the yen’s recent decline.

Silver Market Outlook

Silver bulls have capitalized on last week’s dip, maintaining an elevated long position established at lower levels. Despite the recent pullback, silver had reached a multi-year high of $29.80 on April 12, fueled by robust purchases from central banks and demand from Chinese retail investors amidst a weaker yuan.

As traders maneuver through market uncertainties, close attention to the Federal Reserve’s communication and upcoming economic data will be essential in determining the near-term path of silver prices.