Silver Prices Rebound Ahead of Fed Rate Hike Decision

Silver prices have rebounded today, trading around $64.00 per troy ounce as investors adjust their positions ahead of the Federal Reserve's monetary policy decision.

The market widely expects a 25-basis-point interest rate hike, which would bring the federal funds target range to 3.75%-4.00%. This move would mark the first interest rate increase by the US central bank since July 2023.

Expectations of tighter monetary policy have strengthened amid persistent inflationary pressures in the United States, partly fueled by the energy price shock stemming from the conflict in the Middle East.

The resilience of the US economy gives the Fed more room to tackle inflation. US Retail Sales rose 1.2% MoM in August, exceeding expectations for a 0.8% increase and rebounding from a 0.5% contraction in July.

The market will be particularly focused on whether policymakers signal that the tightening cycle could continue. According to the CME FedWatch Tool, investors see a nearly 79% probability that the Fed will deliver at least two interest rate hikes by the end of the year.