Gold and silver prices remain high in the run-up to the U.S. Federal Reserve's interest rate decision. In this way, it is the FOMC comments that would determine whether silver renews its local high recorded on April 26 or not.
Investors estimate that there is almost a 90% chance that the Fed will raise its key rate by another 0.25%. But the latest macroeconomic statistics suggest a halt in the regulator’s tightening cycle.
The U.S. job openings fell to 9.6 million in March, while the unemployment rate dropped to 1.6. The central bank is keeping a close eye on these indicators when it makes decisions about its interest rate.
Craig Erlam, a senior market analyst at OANDA, sees comments coming from the Fed on its monetary stance as a key determinant for the gold rally.
The U.S. bank is not going to ease its policy until it needs to do so, says Erlam. But this could lead to the regulator’s unexpected reversal in the coming months.
The market has already taken into account a future rate hike, so dollar and other asset pricing will depend on the comments of Jerome Powell, the Chairman of the Federal Reserve. If the regulator announces monetary easing, the greenback will depreciate, and as a result, the value of gold and silver will rise.
Moreover, uncertainty over the banking crisis and concerns related to a potential default in the U.S. are still present among market players. This situation gives support for precious metals’ prices as well.
Silver prices are in a sideways correction, moving in the range of 24.60 - 26.05 on the 4-hour timeframe. Today's news background might knock the price of the metal out of the current range. However, new prerequisites for growth have come into play within this corridor on the lower timeframe.
According to the M15 timeframe, the price is now forming a third ascending wave. A breakout through the top of the first wave at 25.48 is going to intensify the third wave movement towards resistance at 26.05 and higher.
A strategy could be the following:
The short-term outlook for silver is a buy one.
The target is at the level of 26.05.
It is worth fixing a part of the profit near 25.60.
A Stop Loss should be placed at 24.80.
The bullish trend has a short-term nature, so the trade volume should not exceed 2% of your balance.
This content is for informational purposes only and is not intended to be investing advice.