Silver price movements in recent months and sessions have been founded on its duo status. To begin with, the rallying in recent weeks has largely been founded on hopes that the Fed will ease on its aggressive monetary policy in its coming meetings. Wednesday’s FOMC meeting minutes will avail further cues on the bank’s position. Besides, COVID-19 in China and the health of the global economy will remain influential factors for the metal.
During its December interest rate decision, the US central bank hiked its interest rates at a slower pace of 50 basis points. The decision came at a time when the US Labor Department indicated that consumer prices had increased at a lower rate of 7.1% in November YoY compared to the expected 7.3%.
Even so, Jerome Powell insisted that interest rate rates would continue as the bank strives to ease inflation to its target of 2%. As such, FOMC meeting minutes on Wednesday are expected to provide further cues on the Fed’s position. Signs that the bank will maintain its aggressive monetary policy will likely erase some of the silver price gains recorded in recent weeks.
At the same time, a surge of COVID-19 in China and concerns over the health of the global economy continue to weigh on silver price. In fact, even with a relatively dovish Fed, these two factors may curb the metal’s gains in the short term.
Silver price outlook
Silver price extended its gains on Tuesday; rising to its highest level since 22nd April earlier in the day. The metal has been on a rise in recent months; rallying by about 36% since the beginning of September when it hit a one-and-a-half years low at 17.56.
As seen on its daily chart, it continues to trade above the 25 and 50-day exponential moving averages. While this is a bullish sign,the FOMC meeting minutes will be an influential factor in the ensuing sessions.
Ahead of the aforementioned economic event, I expect silver price to hover around 23.90. Hints that the Fed will maintain its aggressive monetary policy will likely have the bulls defend the support at 23.25. On the flip side, a dovish stance by the central bank may have the bulls retest the resistance level at 24.56 or higher at 24.79.