Silver Gains Ahead of Fed Rate Decision

Silver prices were around the $63 per ounce mark on Wednesday, testing their lowest in over one month, after the Federal Reserve delivered a 25bps rate hike. The decision by the US central bank was widely expected following data that reflected high consumer and producer prices, in addition to robust economic growth and low unemployment. Additionally, most FOMC members projected another rate hike this year. Shorter-maturity yields rose to multi-year highs, pressuring bullion prices as markets favor securities that bear yield. Meanwhile, the Bank of Japan is also due to hike its rates this week. In turn, metals with exposure to datacenter development came under pressure as AI model executives voiced concerns over the safety of more intelligent models, risking the speculative demand for compute infrastructure.

Silver prices rose more than 1% to around $64.50 an ounce on Wednesday, as oil prices eased after a two-day rally while investors awaited the US Federal Reserve’s upcoming interest-rate decision for further direction. The Fed is widely expected to raise interest rates for the first time since 2023, with markets pricing in more than a 90% probability of at least a 25-basis-point hike, according to the CME FedWatch Tool. The move could be the first of two rate increases projected for the year, as persistent inflation and heightened tensions in the Middle East add to concerns over rising costs. Meanwhile, several other major central banks are scheduled to announce policy decisions this week. The Bank of Japan is expected to raise interest rates to their highest level in 31 years on Friday, while the Bank of England is widely expected to keep rates unchanged on Thursday, although the decision remains a close call.

Silver climbed above $64 an ounce on Wednesday, rising for the second straight session as gains in oil prices and bond yields lost momentum ahead of the latest US Federal Reserve policy decision. Oil prices pulled back from multi-month highs after a surprise increase in US crude inventories, although ongoing supply disruptions in the Middle East continued to support prices. Meanwhile, global bond yields steadied after their recent rise as investors turned their attention to several major central bank decisions this week. The Fed is widely expected to raise interest rates by 25 basis points, marking its first hike in around three years as policymakers work to curb inflationary pressures. Markets will also focus on signals regarding another potential increase later this year, with expectations building for a move in October or December. The Bank of Japan is likewise expected to raise borrowing costs this week, while the Bank of England is anticipated to leave rates unchanged.