Silver price prediction ahead of the FOMC meeting minutes

By: Faith Maina
Faith Maina
Faith strives to break down complex developments so investors can make better informed decisions. When Faith is not immersed… read more.
on Nov 22, 2021
  • Silver price remains within a horizontal channel for about two weeks now.
  • Its status a a hedge against inflation and safe haven has boosted the precious metal.
  • Focus is now on the FOMC meeting minutes nd Biden's choice of the next Fed chair.

Silver price remains within a horizontal channel as has been the case for about two weeks now. In the new week, focus will be on FOMC meeting minutes. Investors also await Biden’s decision on the new Fed chair.

silver price
silver price

US inflation

Silver price has been trading within a horizontal channel for close to two weeks now. On the one hand, its status as a safe haven and hedge against inflation has boosted it above the crucial level of $24.00. According to recent data, inflation rate is at its highest level since 1990.

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Nonetheless, there are growing expectations that the Fed will start increasing interest rates earlier than expected. The prospects explain why silver price remains subject to limited upward potential.

In the ensuing sessions, focus will be on the FOMC meeting minutes scheduled for release on Wednesday. In its November meeting, the US central bank confirmed its plan to start tapering asset purchases. While acknowledging that soaring prices may persist longer than expected, Chair Powell indicated that the bank would not hasten interest rate hikes. In the upcoming minutes, investors will be keen on the policymakers’ tone on probable rate hikes in 2022.

Fed leadership

At the same time, silver price will be reacting to the highly-anticipated decision on the next Fed chair. President Biden is expected to announce his choice soon. Among the probable candidates are the current chair Jerome Powell and Fed Governor Lael Brainard.

Powell has maintained a cautious stance despite the rising consumer prices. Interestingly, the market may price in an even more dovish Fed if Brainard occupies the seat. In the latter scenario, it may take longer for the US central bank to start hiking interest rates.

As has been the case since the peak of the coronavirus pandemic, a dovish Fed would exert pressure on the greenback while boosting precious metals.

Preliminary US GDP numbers, home sales, jobless claims, and the PCE price index are the other events that will likely impact silver price in the new week.  Notably, data that confirms the ongoing economic recovery in the US will probably curb silver’s upward potential. Ahead of the aforementioned events, the benchmark 10-year Treasury yields are t 1.58, which is considerably higher than the month’s low of 1.41. Rising bond yields usually offer support to the greenback.

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