Fed Moves Take Center Stage as Precious Metals Face Pressure
The precious metals market is closely watching the Federal Reserve's upcoming moves as US Treasury yields shot up beyond 5% earlier this week, driven by an energy shock from the Middle East and persisting inflation. This has led to expectations of tighter policy, which could put pressure on gold and silver prices. However, despite the dollar being at multi-week highs, it remains at the upper end of its recent trading range due to the upcoming Fed moves.
Gold continues to have support from traders who are concerned about the sustainability of US fiscal policy, as well as ongoing geopolitics in Iran, the Gulf region, and energy infrastructure. Silver also has similar support from monetary policies, but is expected to be more negatively impacted by diminishing manufacturing demand.
The Fed's expected hike does not significantly impact the outlook for gold and silver, as possible signals of future tightening are seen as neutral. The overall market is waiting for insight into the Fed's forecast, which could project tighter monetary policy.