Silver Prices Forecast: XAG/USD Traders Await FOMC’s Dovish Pivot

November 20, 2023

NEW YORK (November 20) Silver (XAG/USD) prices are lower on Monday, despite a weakening U.S. Dollar. The slight increase in U.S. Treasury yields is believed to be the primary factor behind this movement. Currently, there is a notable discrepancy between silver’s market price and real yields, suggesting a need for weaker economic data to propel prices above the $25.00 per ounce threshold.

Economic Indicators and Federal Reserve’s Stance

Recent data indicating a slowdown in the U.S. job market and a consumer inflation report falling short of expectations have reignited speculation that the Federal Reserve might ease monetary policies sooner than anticipated. This potential shift in policy direction has led to a decrease in the dollar value and bond yields, enhancing the attractiveness of non-yielding assets like silver for investors.

Dollar’s Influence on Silver Prices

The dollar’s decline to a more than two-and-a-half-month low against other currencies has made silver more affordable for holders of other currencies. Despite this, silver prices edged lower, aligning with the broader market belief that the Federal Reserve’s rate hike campaign might be nearing its end.

Anticipation of FOMC Minutes

Market focus now turns to the upcoming release of the Federal Reserve’s meeting minutes. These minutes are expected to provide further clarity on the Fed’s policy direction, potentially indicating a more dovish approach. The anticipation of what is being termed as a ‘Fed pivot’ could result in softer U.S. Treasury yields and a further weakened dollar, potentially benefiting silver and other risk assets.

Short-Term Outlook:  Silver Prices in a Flux

In the short term, silver prices are likely to be influenced by the Federal Reserve’s policy decisions and economic indicators. The current market sentiment suggests a cautious outlook, with potential for price fluctuations depending on the Fed’s upcoming decisions and the economic data landscape.


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