United States silver scrap prices rose on Tuesday, while silver futures prices at New York Mercantile Exchange settled higher as investors readjusted positions ahead of the Federal Reserve’s two-day monetary policy meeting.
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The Fed’s statement on Wednesday largely mirrored the one issued after its last policy meeting in March, with the U.S. central bank describing an improving labour market but acknowledging that economic growth seemed to have slowed. Prices now reflect the expectation the Fed will wait until September before raising rates, the same as before the Fed’s meeting. Fed Chairwoman Janet Yellen confirmed last month that the central bank would adopt a cautious approach to policy normalization, which effectively rules out a rate-hike before mid-2016.
“We expect the market to be quiet until after the Fed meeting”, said Simona Gambarini, a commodities economist at Capital Economics in London.
Gold has now climbed for the past three sessions. A weaker dollar tends to be supportive for demand for gold priced in the US currency., while a stronger dollar can have the opposite effect. That pared this year’s gain to 16 percent.
“In our view, a near-term catalyst to drive gold higher is not obvious, but we think the metal remains well supported”. According to the CME Group’s FedWatch tool, the market is pricing in zero chance of a rate hike later today.
Meanwhile in today’s data, United States goods trade balance stood at -56.9 billion, above the forecast of 62.5 billion.
Silver prices have been on a strong rising trend lately.
Pending home-sales data will be issued late morning Wednesday.
A return to a silver /gold ratio of 66.6 (the average 1983 – 2003) would see silver rise to US$18.8/oz while a ratio of 61.1 (the average since 2003), could see silver trade as high as $20.5/oz, analysts at the bank said.
According to the CFTC’s weekly Commitment of Traders data up to April 19, released last Friday speculators once again added to longs, building a bullish position of 378.6 million troy ounces.
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Platinum for July settlement edged up $6.10 or 0.6 percent to $1,026.20 per ounce, while the most-actively traded palladium contract stood at $609.70, down $5.20 or 0.9 percent.
