- Silver prices have remained range bound on Thursday; Capped below $26.00 but well supported above $25.30-$25.40, despite lower action.
- Geopolitics will continue to be a major driver of price action next week, although the Fed meeting is also in the spotlight.
Silver prices (XAG/USD) remain below the $26.00 level and within intraday ranges on Thursday, despite weakness in US stocks, as investors show skepticism over previous statements by Russian President Vladimir Putin, alluding to positive developments in the talks with Ukraine. The situation on the ground remains tense as Russian forces continue their slow advance towards key cities in Ukraine, including Kiev, and Western officials sound the alarm over possible Russian use of chemical and biological weapons.
Meanwhile, Western nations continue to ramp up sanctions against Russia, with the G7 moving on Friday to remove Russia’s preferred nation trading status and also pushing to limit Russia’s access to IMF and World Bank funds. The potential for more negative headlines is likely helping to keep XAG/USD prices well supported above previous session/weekly lows in the $25.30-$25.40 area before Friday’s close. Equally though, hopes of progress in the Russia-Ukraine talks following earlier more positive comments from Putin have likely contributed to silver reaching selling pressure near $26.00.
Next week, geopolitics is not the only important factor for silver traders to watch. The Fed is expected to raise interest rates on Wednesday by 25 bps. Of more interest to investors will be the tone of the statement, Fed Chairman Jerome Powell’s comments at his post-meeting press conference, and the updated dot plot and economic forecasts.
Were it not for recent geopolitical stagflation events, this week’s US inflation reading for February may well have weighed on silver as traders priced in a more aggressive Fed tightening. But now that inflation is short term will rise to reflect recent commodity price action and the Fed now must deal with a new big downside risk to US growth, real short-term rates don’t look ready to break out of deeply negative territory for some time. That means that while it will probably be a bumpy ride, XAG/USD has a good chance to get back to previous weekly highs in the $27.00 area in the next few days/weeks.
Source: Fx Street
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