Fed’s Rate Decision Could Spark Market Volatility

The Federal Reserve’s policy announcement later today is the primary market catalyst. The central bank is widely expected to hold rates steady at 4.25%-4.50%, but traders will scrutinize Fed Chair Jerome Powell’s press conference and the updated economic projections for policy signals​. The key question is whether the Fed’s outlook supports rate cuts later this year or signals a prolonged high-rate environment.

The CME FedWatch Tool indicates a 98% chance of a rate cut in June, yet concerns persist over inflation and trade-related price pressures. If Powell takes a more hawkish tone, reinforcing a wait-and-see approach on rate cuts, bond yields could rise and strengthen the U.S. dollar—potentially pressuring silver prices lower​​.

Geopolitical and Inflationary Risks Support Silver

Beyond the Fed, inflation risks remain elevated, partly due to renewed trade tensions. Former President Donald Trump’s proposed tariffs, expected to take effect in April, could drive inflation higher, complicating the Fed’s policy outlook​. At the same time, escalating geopolitical risks, particularly renewed conflicts in the Middle East, are keeping investors cautious. These factors continue to support safe-haven demand for precious metals​.

Market Forecast: Silver Faces Fed-Driven Volatility

Silver’s rally appears stretched, leaving it vulnerable to a pullback if the Fed signals a slower path to rate cuts. If Powell emphasizes patience on monetary easing, the dollar could strengthen, applying downward pressure on silver. Conversely, a dovish Fed tone—hinting at easing later this year—could fuel renewed buying interest.

Traders should brace for volatility in the wake of the Fed’s decision, with silver likely reacting sharply to any surprises in Powell’s message.

More Information in our Economic Calendar.