- Silver makes session highs despite a more hawkish than expected Fed.
- Risks in Brexit and tariff wars between the US and China keep risk appetite at bay.
The price if silver has shot-up in the five-minute chart to print a fresh high for the day following the Federal Reserve’s interest rate decision and the Committee’s changes to its statement. Silver is currently trading at $16.86, the session highs and is up 1.14% at the time of writing, having travelled from a low of $16.60 early in the day.
The Fed outcome was a little more hawkish than expected, especially considering most Fed observers have been looking for a rate hike sometime in 2020, most likely in the springtime. However, the updated dots say different and that is where the market attention has been. Meanwhile, trade wars and an expected announcement from the US President Donald Trump before the weekend is likely keeping traders to the sidelines and US rates relatively steady.
Key takeaways from FOMC statement and projections
- The market has priced in virtually no chance of rate move through February.
- IOER 1.55% vs 1.55% prior.
- Fed drops language about ‘uncertainties about this outlook remain’.
- Vote was unanimous.
- “The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate”.
- No changes in the economic outlook paragraph.
- Says “the current stance of monetary policy is appropriate”.
- Leaves forecasts for GDP and inflation unchanged, lowers unemployment.
- Median forecast is for one rate hike in 2021 and one in 2022.
Fed projections
Fed statement changes
Risks ahead support silver
For now, the focus is on US President Donald Trump and whether he is going to announce that scheduled tariffs on Chinese imports will go ahead or not on the 15th of December. This is a major theme for risk of markets including precious metals and USD/JPY traders await the Fed and tariff news, US dollar on thin-ice – more emphasised there.
Other than that, Brexit is another factor which can be supportive of precious metals. We have the UK elections on Thursday coming up and the odds of a conservative victory of Labout have narrowed considerably over the past week which is pointing to the possibility of a hung UK parliament – a supportive factor for precious metals. More on that, here: UK Election Preview: GBP bulls to hold their horses
Silver levels
Share
