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Silver Sticks Stubbornly Close to $18, Fed Decision Looms

Silver prices remain steady, tantalizingly close to the $18 level. With analysts split on whether the Fed will lower rates at today’s policy meeting, we could see some volatility in the North American session.
Kenny Fisher
Silver daily chart, September 10, 2019

Silver is trading quietly on Wednesday, as the lack of activity has continued throughout the week. In the European session, the metal is trading at $17.83, down $0.17, or 0.93%. This has wiped out the gains seen in Tuesday trade.

All Eyes on Federal Reserve

The Federal Reserve holds its monthly policy meeting on Wednesday, and there is a good chance that the Fed will again press the rate trigger, after lowering rates by 25 basis points at the previous meeting in July. There is some uncertainty as to what the Fed has planned – the CME Group has projected a 56% likelihood of a rate cut. Given this uncertainty, traders should be prepared for possible volatility in the North American session. If the Fed does cut the rate at today’s meeting, I would expect the U.S. dollar to weaken across the board, which would boost silver prices. Traders should also pay attention to the rate statement, which will help gauge the mood of the Fed and could affect the direction of silver.

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Technical Analysis

I continue to keep a close eye on the round number of $18.00. This pesky resistance line has proven resilient, despite being tested during the week. Above, $18.50 is a major resistance line. If silver can break through, it would have room to make a run at $20.00, a psychologically significant level. On the downside, there is immediate support at $17.50. This is followed by support at $17.00, which has held since August 23. With silver within striking of both resistance and support levels, I expect to see stronger movement from the metal before the end of the week.

XAG/USD 4-Hour Chart
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