Silver took a shot at the $18.00 level on Monday, but has retreated on Tuesday. We could see stronger movement on Wednesday, with the release of GDP and the Federal Reserve rate decision.
Silver continues to lose ground this week. In Tuesday’s European session, the metal is trading at 17.70, down $0.15 or 0.86% on the day. After a late-week rally, the metal has reversed directions and is down 2.0% this week.
Investors are keeping an eye on Wednesday, with some key releases on the calendar. The U.S. will release the initial release for third-quarter GDP. The final reading for second-quarter GDP came in at 2.0%, and the markets are braced for a weak reading, with a forecast of just 1.6%. The U.S. economy is clearly undergoing a slowdown. The manufacturing industry continues to sputter as the ongoing U.S.-China trade war as taken a toll on U.S. exports.
Another key event is the Federal Reserve’s monetary decision. The Fed trimmed rates by 25 basis points at the last two meetings, and policymakers are expected to repeat this move on Wednesday, bringing rates to a range between 1.50% and 1.75%. The FOMC has priced in the likelihood of a rate cut at 96%. Still, the markets could react, given the magnitude of a third consecutive cut. This could translate into gains for precious metals such as gold and silver, as the Fed continues to cut rates in an attempt to boost the U.S. economy, which is undergoing a slowdown.
Kenny is an experienced market analyst, with a focus on fundamental analysis. Kenny has over 15 years of experience across a broad range of markets and assets –forex, indices and commodities.