As of the time of writing this article on Tuesday, the price of silver (XAG/USD) was trading at the round level of $57.00, which is lower compared to the previous day, as investors remain cautious ahead of the Federal Reserve's monetary policy decision. The strength of the US dollar also constrains demand for this precious metal, despite the uncertain geopolitical situation.
Markets continue to assess the latest developments in the Middle East. US President Donald Trump reported that the United States is engaged in "productive negotiations" with Iran in an attempt to resolve the regional conflict. The prospects for de-escalation are putting pressure on oil prices, alleviating concerns about renewed inflationary pressure and reducing expectations for an imminent rate hike.
However, Trump also warned that US military strikes could resume if negotiations do not yield results. At the same time, several security incidents reported in Saudi Arabia, Jordan, and Iraq highlight the ongoing tensions, and disruptions in shipping through the Strait of Hormuz continue to pose risks to global energy markets.
Investors are now focusing on the Federal Reserve meeting scheduled for this week. Overall, markets expect the central bank to keep interest rates unchanged, although some participants still suggest the possibility of an immediate hike. The prevailing view indicates that any potential rate increase will be deferred until September, and market participants will closely monitor the Fed's statements for new guidance regarding the future direction of monetary policy.
From a technical perspective, silver has fallen below the 20-day SMA, which is favorable for the bears, but it is attempting to hold at least the round level of $57.00. Failing to maintain this level will accelerate the drop towards the July low. Additionally, oscillators are negative, confirming the bears' advantage.
