Silver prices are quiet in early trade on Wednesday as markets await this afternoon’s FOMC meeting announcement. Stocks are moving slightly higher while crude oil prices are falling and the dollar index is higher.
Today’s FOMC meeting announcement will likely be the data highlight of the week. This announcement will not be followed with a press conference, and it is widely expected that no action will be taken by the central bank today.
Investors will be looking for clues, however, as to the Fed’s plans regarding interest rates. While a June rate hike is still on the table, there has been increasing speculation that the first hike may be delayed until September. Given the lack of inflation along with ongoing economic struggles in the EU, Japan and other markets, some wonder if the Fed may in fact hold off on raising rates until sometime next year.
While the lack of inflation is a cause for concern, the economy continues to show improvement and is building momentum. This will likely keep the Fed on course for later this year and the central bank will likely address these and other issues in its remarks.
The dollar continues to trend higher, and as such may provide some degree of resistance for the silver/gold bulls. Should the Fed signal that it remains on track for a June or even September rate hike, the greenback may continue on the current path of least resistance-higher. One could certainly argue that the precious metals markets have already priced in the first hike, and one could say the same about the dollar as well.
Investors will be paying close attention to ongoing developments in Greece as the anti-austerity Syriza party settles in to power. The new Greek Prime Minister has already taken action to roll back austerity measures in place according to the country’s bailout terms with the EU and other creditors. This situation will likely result in an intense debate between Greece and its creditors, and may cause a degree of risk aversion in global markets until resolved.
The silver market appears to be consolidating between the $18 and $18.50 per ounce level. After making what appears to be a meaningful bottom back in December, the silver market has been trending higher and continues to look strong. The market currently looks like it may be taking a breather before beginning another leg higher. Silver is showing some good signs of market strength, and may continue to build on recent gains. This is especially significant given some of the outside market forces working against silver like lower oil and a higher dollar.