Silver Steady Higher, Market Awaits Rate Cut Signals
Silver strengthened to around $74 per ounce on Wednesday, halting two consecutive sessions of declines. This increase was driven by dip-buying and investor positioning ahead of the release of the FOMC Meeting Minutes from the Fed's January meeting.
The market is currently pricing in the possibility of several interest rate cuts this year, a backdrop that generally supports non-yielding assets like silver. However, these expectations are not yet fully "straightforward," as the direction of policy remains highly dependent on subsequent data.
Recent comments from central bank officials signaled that interest rates could be held on hold for longer, although the opportunity for additional cuts remains open if inflation continues to move toward the 2% target. Therefore, the minutes are crucial for assessing the Fed's stance: whether it is likely to remain on hold or begin to open up room for easing.
In addition to the minutes, market participants are also monitoring further comments from Fed officials and this week's US economic data, particularly GDP and core PCE, to gauge the strength of the economy and the direction of inflation. On the other hand, the previous strengthening of the dollar and easing geopolitical tensions had suppressed demand for safe-haven assets, while market liquidity remained thin due to the Chinese New Year holiday in most Asian markets.
Market impact: If the minutes are hawkish (holding interest rates longer), the dollar typically strengthens, while gold and silver tend to be under pressure. If the minutes are dovish (closer to a cut), the dollar weakens, and gold and silver are likely to strengthen. For oil, the response is more mixed: a stronger dollar can hold down oil prices, but the ultimate direction is often determined by a combination of risk sentiment and geopolitical headlines. (asd)
Source: Newsmaker.id
