XAG/USD Depreciates Towards $33.50 Ahead Of Fed Policy Decision
Silver (XAG/USD) prices fell after hitting a five-month high of $34.23 on Tuesday (3/19), trading around $33.70 per troy ounce during European trading hours on Wednesday. The decline came as silver investors took a breather ahead of the Federal Reserve’s (Fed) interest rate decision later in the day.
Traders will likely be watching the Fed’s latest economic projections for insights on the future trajectory of US interest rates. Higher interest rates tend to weigh on demand for non-yielding assets such as Silver, limiting its upside potential.
Any hawkish signals from Fed policymakers could strengthen the US Dollar (USD), making dollar-denominated Silver more expensive for buyers using foreign currencies. This could create additional headwinds for the grey precious metal.
However, downside risks to Silver prices appear limited due to rising safe-haven demand driven by rising geopolitical tensions. US President Donald Trump reiterated his administration’s commitment to military action against Yemen’s Houthis and warned that Iran would be held accountable for any further disruption to Red Sea shipping. Meanwhile, Israeli airstrikes on Gaza, which ended a week-long ceasefire, have killed at least 200 people, according to Palestinian health authorities, Reuters reported.
Geopolitical tensions, however, eased slightly after President Trump and Russian President Vladimir Putin agreed on Tuesday to immediately halt attacks on energy infrastructure amid the Ukraine war. Putin, however, refused to endorse a broader month-long ceasefire negotiated by Trump’s team with Ukrainian officials in Saudi Arabia.
Source: FXSreet
