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KEY POINTS:

• All eyes on the Fed’s decision today
• More hawkish than expected decision is likely to trigger a selloff
• More dovish than expected one should support silver further
• Key near-term support around the 59.00 level

FUNDAMENTAL
OVERVIEW

Silver continues to break records as Fed rate cut bets after Fed’s Williams comments on November 21 pushed the precious metal to new all-time highs. The market might have gotten a bit overstretched though, and that increases the risk of an aggressive selloff in case the Fed today were to come out more hawkish than expected.

The FOMC is expected to deliver a “hawkish cut” today. In fact, the consensus sees the central bank to signal a pause and communicate that the bar for more rate cuts will now be higher. That won’t be surprising, so it shouldn’t really scare the market.

Traders will be looking for deviations from the expectations. A more hawkish than expected Fed will likely lead to an aggressive selloff in silver, possibly even taking it back to the 55.00 level in short order. On the other hand, a more dovish than expected decision should give further boost to the precious metal.

There are several potential surprises though that could trigger much stronger reactions in the markets and you can read more about it here.

SILVER TECHNICAL
ANALYSIS – DAILY TIMEFRAME

On the daily chart, we can
see that after breaking the previous all-time highs around the 54.46 level,
silver extended the gains as more buyers piled in and increased the momentum. From
a risk management perspective, the buyers will have a better risk to reward setup
around the previous all-time high and/or the upward trendline.

If we get a pullback into
those levels, we can expect the buyers to step in to position for a rally into a
new all-time high. The sellers, on the other hand, will look for downside
breaks to regain control and push into new lows.

SILVER TECHNICAL ANALYSIS – 4
HOUR TIMEFRAME

On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum and a clear
support zone around the 59.00 level. If we get a pullback, we can expect the
buyers to step in there with a defined risk below the trendline to keep pushing
into new highs. The sellers, on the other hand, will look for a break lower to pile
in for a deeper pullback into the 54.46 level next.

SILVER TECHNICAL ANALYSIS – 1
HOUR TIMEFRAME

On the 1 hour chart, there’s
not much else we can add here as the buyers will have a better risk to reward
setup around the 59.00 support, while the sellers should wait for a break below
the trendline to gain more conviction for the downside. The red lines define
the average daily range for today.

UPCOMING CATALYSTS

Today we have the Fed’s decision.

This article was written by Giuseppe Dellamotta at investinglive.com.

Gold (XAU/USD) edges slightly lower on Wednesday, with price action contained inside the recent consolidation zone as markets brace for the Federal Reserve’s (Fed) interest rate decision. At the time of writing, XAU/USD is hovering near $4,200, down from the intraday high of $4,218.

Brazil IPCA Inflation registered at 0.18%, below expectations (0.2%) in November

United States MBA Mortgage Applications climbed from previous -1.4% to 4.8% in December 5

The United States (US) Federal Reserve (Fed) will announce its interest rate decision on Wednesday, with markets widely expecting the US central bank to deliver a final 25 bps cut for 2025.

The Bank of Canada (BoC) is widely expected to maintain its benchmark interest rate at 2.25% at its meeting on Wednesday. That would follow two consecutive quarter-point rate cuts in September and October.

The Pound Sterling (GBP) trades 0.16% higher to near 1.3320 against the US Dollar (USD) during the European trading session on Wednesday. The GBP/USD pair gains as the US Dollar drops slightly amid caution ahead of the Federal Reserve’s (Fed) monetary policy announcement at 19:00 GMT.

The USD/JPY pair clings to three-day gains near 157.00 during the European trading session on Wednesday.

The Pound keeps drawing support from the broad-based Yen weakness this week and remains steady near multi-year highs, at the 208.90 area, with downside attempts contained above 208.20 so far