Moreover, traders are taking a conservative stance ahead of key central bank meetings and critical economic data releases, contributing to silver’s lackluster performance.
Key upcoming events, such as the Federal Open Market Committee (FOMC) meeting and the US Nonfarm Payrolls (NFP) report, are expected to provide further insights into the direction of US monetary policy and economic health, potentially influencing silver prices shortly.
Diminished Expectations for Fed Rate Cut Boost USD, Weigh on Silver Prices
In the US, dwindling prospects for an imminent Federal Reserve rate cut have bolstered the US dollar, putting downward pressure on silver prices. Recent data, including the US Personal Consumption Expenditures (PCE) Price Index for March, which showed a rise of 0.3% and a year-on-year increase to 2.7%, has strengthened expectations that the Fed might postpone any rate reductions until September.
This anticipation of sustained higher rates has enhanced the dollar’s attractiveness, diminishing the allure of silver as both a safe-haven asset and an inflation hedge. The firming of the dollar, underpinned by solid US economic indicators and a hawkish monetary policy outlook, has consequently subdued silver’s appeal, as investors recalibrate their expectations for interest rates and seek higher-yielding alternatives.
Impact of Global Risk Sentiment on Silver Price
Globally, improved risk sentiment, driven by decreasing tensions in the Middle East and hopeful signs from ongoing peace negotiations, has lessened the demand for traditional safe-haven assets such as silver.
As a result, investors are shifting their focus toward riskier assets like equities, influencing the performance of precious metals negatively.