Market reaction to the Fed minutes

Investors did not seem surprised by this development, as they had been factoring in the potential move for weeks. The silver market remains above 50-day moving average support, but needs a catalyst to decisively break above the $29.50 pivot point. This technical position suggests potential for further gains if additional positive factors emerge.

Government bond yields and dollar movement

US Treasury yields rose on Thursday, with the 10-year yield rising over 2 basis points to 3.799%. This uptrend followed the release of dovish Fed minutes and a sharp downward revision to preliminary wage data. At the same time, the US dollar traded near its yearly low against major currencies such as the euro and the pound sterling. A weaker dollar often supports the price of silver as it makes it more attractive to international buyers.

Fed stance and market expectations

The Federal Reserve’s July meeting minutes show that most participants favor easing monetary policy at the next meeting if data comes in as expected. This prospect has strengthened market expectations. Traders are now pricing in a 66 percent probability of a 25 basis point rate cut in September. The prospect of lower rates makes silver more attractive as an alternative investment.

Upcoming economic indicators

Attention now turns to Federal Reserve Chairman Jerome Powell’s keynote speech at the Jackson Hole symposium on Friday. The release of key economic data, including weekly initial jobless claims, the August manufacturing and services purchasing managers’ index, and July existing home sales data will also provide insight into the economic situation. These indicators can impact silver prices by influencing expectations for economic growth and monetary policy.

Market forecast

The short-term outlook for silver appears cautiously positive. The combination of a potentially accommodative stance from the Fed, a weaker US dollar and current economic uncertainties could support precious metal prices. However, traders should be alert to any unexpected statements in Powell’s upcoming speech or sudden changes in economic data that could quickly change market sentiment and silver prices.

Technical Analysis