FUNDAMENTAL OVERVIEW Silver has now erased all the gains since the start of US-Iran ceasefire as the current stalemate is keeping the hawkish Fed worries alive.
FUNDAMENTAL OVERVIEW Silver has now erased all the gains since the start of US-Iran ceasefire as the current stalemate is keeping the hawkish Fed worries alive. In fact, despite lower real yields, looser financial conditions and a weaker US dollar, the hawkish Fed bias has been the main culprit capping the bullish momentum in precious metals.
This is unlikely to change anytime soon as even if the US-Iran war officially ends and the Strait of Hormuz is reopened, the increase in economic activity might keep inflation higher for longer and force the Fed to hold rates steady. Nonetheless, the reopening of the Strait should give the market a boost in the short-term as it would ease some inflation worries and bring back rate cut expectations. After that though, traders will be focused on economic data and the Fed’s stance.
Tomorrow, we have the FOMC policy decision and although the Fed is expected to keep everything unchanged amid the US-Iran uncertainty, there’s a risk of a more hawkish leaning due to resilient US data and a longer than expected US-Iran war. A neutral Fed shouldn’t bring much volatility, but a more hawkish one could add more pressure on silver. SILVER TECHNICAL ANALYSIS – DAILY TIMEFRAME On the daily chart, we can see that silver extended the losses after the price fell back below the key 78.00 level.