Silver Prices Unchanged as Markets Await Fed Decision

Silver prices were little changed Wednesday, as markets consolidated ahead of the Federal Reserve’s interest rate announcement later in the day.

Silver for September delivery held its ground at $19.67 a troy ounce on the Comex division of the New York Mercantile Exchange. Futures prices traded within a narrow range of $19.58-$19.71 through the overnight session.

The grey metal is virtually unchanged this week after declining more than 2% over the previous five days.

silver prices daily 07-27-16

Gold futures were also trading steadily. The yellow metal was virtually unchanged at $1,320.00 a troy ounce.

Spot platinum, the price paid for immediate settlement, edged up 59 cents or 0.1% to $1,094.59 a troy ounce.

Gold’s premium over silver reached a daily high of 67.68 on Wednesday. The gold/silver ratio used by investors to buy and sell precious metals gone more or less unchanged this week as markets awaited fresh trading catalysts.

The US dollar, which normally trades inversely with precious metals, edged higher after back-to-back declines. The dollar index, a trade-weighted average of the greenback against a basket of six currencies, rose 0.1% to 97.26.

The dollar rebounded sharply against the Japanese yen, with the USD/JPY exchange rate climbing 0.9% to 105.7040. The pair declined earlier in the week after sources suggested the scope of Japanese stimulus would be much more limited than previously expected.

A firm dollar continued to weigh on oil prices, which are mired in their worst losing streak since the start of the year. The West Texas Intermediate (WTI) benchmark for US crude futures declined 22 cents or 0.5% to $42.70 a barrel, a fresh three-month low. The US futures contract has declined 14.4% since June 29.

Brent crude, the international futures benchmark, was down 49 cents or 1.1% to $44.39 a barrel. That was the lowest level since late April.

Global equity prices rallied sharply on Wednesday after iPhone maker Apple Inc. (NASDAQ: AAPL) posted a smaller than expected decline in revenue. Separately, Japanese Prime Minister Shinzo Abe signaled he was committed to a $265 billion stimulus program, easing previous concerns about the scope of government efforts to re-inflate the economy.

Japan’s Nikkei 225 Index rose 281.78 points or 1.7% to 16,664.82. Hong Kong’s Hang Seng Index also rallied 0.4%.

Chinese stocks declined sharply after reports indicated that the country’s banking regulator was considering tightening curbs on wealth management products, adding to existing concerns about the flow of capital into the world’s second largest economy.

The Shanghai Composite Index plunged 1.9% to 2,992.00 as a result.

European markets were trading higher across the board on Wednesday. The Stoxx Europe 600 Index advanced 0.6% through the midday. In individual bourses, the United Kingdom’s FTSE 100 Index climbed 0.5%. Germany’s DAX added 0.8%. The main equity gauges in France and Spain were also up 1.4%.

US stock futures were trading higher in pre-market activity, pointing to a more robust start to the day. Dow Jones futures were up 46 points through the early hours.

Wall Street has struggled for gains this week, as investors continued to track mixed corporate earnings. The market is expected to react to the Federal Reserve’s interest rate decision later this afternoon.

Fed policymakers are not expected to vote in favour of raising interest rates, but could comment no the recent performance of the US economy. Recent reports on jobs, industrial production, retail sales and home sales have all beaten to the upside, signaling that the world’s largest economy was regaining momentum after a disappointing start to the year.

The Fed’s decision will come at 2:00 pm Eastern Time.

In economic data, the United Kingdom’s gross domestic product (GDP) expanded faster than expected in the second quarter, raising optimism that economic fundamentals remained strong despite Brexit fears.

The UK’s GDP expanded 0.6% from the previous quarter and 2.2% annually, the Office for National Statistics said in a report on Wednesday. Bother readings were 0.2 percentage points above forecasts.

The United States and Eurozone will also release latest GDP figures on Friday. The Eurozone economy is projected to grow 1.6% annually in the second quarter. Growth in the US economy is forecast to reach 2.6% annually after a 1.7% annualized gain in the first three months of the year.

Sam Bourgi is a financial market analyst for economiccalendar.com. He has more than six years of progressive experience in economic and financial analysis, research consulting and sectoral analysis. As a published author in government, peer-reviewed, online and industry sources, he has developed a fundamental approach to the financial markets with a broad focus on stock indices, commodities and the technology sector. He earned his Bachelor’s Degree from the University of Windsor and Master’s degree from McMaster University.