Silver prices (XAG/USD) have rebounded slightly after hitting a fresh year-to-date low near $52.67. As of Tuesday, the metal is trading at approximately $53.45 in European markets, down 1% from its recent low. The decline is attributed to a strong US Dollar, which remains firm ahead of the Federal Reserve's monetary policy announcement scheduled for Wednesday.
The US Dollar Index (DXY) is currently up 0.2% near 102.25, its highest level in 10 days. A stronger Dollar typically makes silver a less attractive investment due to its unfavorable risk-reward profile for investors.
Analysts at Commerzbank expect the Fed to maintain its policy rate at 3.75-4.00% following September's 25 basis point increase. Fed funds futures suggest no immediate rate changes, with a total hike of 22 basis points expected by the end of 2026 and 69 basis points by the end of 2027. Investors are focusing on the Fed's guidance for a potential December rate hike, considering persistent inflation and upcoming US economic data.
This week, key economic indicators such as the preliminary Q3 Gross Domestic Product (GDP) and the Personal Consumption Expenditure (PCE) Price Index for September will be released on Thursday. Technically, silver remains bearish, trading below the 20-day exponential moving average (EMA) at $57.82. The Relative Strength Index (RSI) at 30.22 indicates oversold conditions, suggesting further downside potential towards $50.00.