here’s what to expect from the Fed minutes

Silver price is hovering below the crucial support-turn-resistance level of $24.50 ahead of the FOMC meeting minutes scheduled for release later on Wednesday. As at the time of writing, the precious metal was at $24.45.

Fundamentals

The market is keen on the Fed meeting in search for cues regarding the central bank’s plan on dealing with the heightened inflationary pressures. In its last meeting in mid-March, it hiked interest rates for the first time since 2018 by 25 basis points. Analysts now expect the Fed to hike rates by 50 basis points from its May meeting.

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Besides, during the FOMC meeting, the Fed Chair hinted at a detailed discussion over the reduction of the massive $8.9 trillion balance sheet. The highly anticipated minutes will likely show an aggressive plan to reduce the balance sheet by detailing monthly caps that will begin in May and increase with time. Analysts forecast monthly caps of $100 billion; which would equate to reductions of about $1 trillion in a year.

On the one hand, an environment of higher interest rates will weigh on silver price. However, investors are concerned that the Fed’s aggressive efforts to deal with inflation may result in a recession. Besides, the inversion of the Treasury yield curve has had some analysts and traders alike forecasting a recession.

At the beginning of the week, the inversion occurred after the yields of the 2-year Treasury note surpassed those of the 10-year note. Granted, opposers of this notion argue that the real yields remain negative. Besides, for some experts, the focus should be on the 3-month and 10-year yield curve, which is still positive.

Even so, the existing concerns continue to boost silver’s safe-haven appeal. Besides, the ongoing Russia-Ukraine crisis remains a key bullish driver for silver price.

Silver price forecast

Silver price is finding resistance at 24.50 ahead of the FOMC meeting minutes. Over a span of ten sessions, the precious metal has been in the red for seven sessions. Even with the recorded decline, it has held steady above the critical level of 24.00 since the onset of the Russia-Ukraine war in late February.

On a daily chart, it is hovering around the 50-day while trading below the 25-day EMA. In the short-term, I expect silver price to continue finding resistance at 24.50 as the market awaits further cues from the Fed minutes.

As a knee-jerk reaction to the minutes, it may drop past the crucial level of 24.00 before bouncing back. If that happens, 23.88 and 23.66 will be support levels worth watching. With the subsequent rebound, it may hit 24.30 as 24.50 remains a critical resistance zone.