Silver’s Record Rally Pauses Ahead of Critical Fed Meeting

Silber Preis XC0009653103

The white metal is showing signs of fatigue this week, retreating from its recent surge toward the $59 level. Silver prices are down over one percent today, trading at $57.78 per ounce. This marks the first notable pullback in weeks, driven by profit-taking and investor caution ahead of the imminent Federal Reserve interest rate decision. Market observers suggest this consolidation phase may ultimately support a healthier long-term uptrend.

• Spot silver has declined 1.10% to $57.78.
• The metal's year-to-date performance remains formidable, boasting a gain of +99%.
• All eyes are on the Federal Reserve's policy announcement scheduled for this week.
• Physical stockpiles held in exchange warehouses have dwindled to historic lows.

Profit-Taking Emerges Following Stellar Gains

Silver's powerful rally culminated on Friday with a push to fresh all-time highs above $59. Such a steep and rapid ascent has naturally prompted short-term traders to lock in profits, making the current retracement a typical market reaction. Analysts emphasize that this does not jeopardize the broader bullish trajectory.

From a technical perspective, the metal remains in a strong position. Its Relative Strength Index (RSI) reading of 62 places it in a neutral to slightly overbought condition. The current test is whether the established support band between $57 and $58 will hold.

All Eyes on the Federal Reserve

The primary focus for traders is the upcoming Federal Open Market Committee (FOMC) meeting. While financial markets widely anticipate an interest rate cut, the accompanying commentary from Fed Chair Jerome Powell is considered far more significant. Any hint at a dovish path forward could weaken the U.S. dollar and provide fresh impetus for silver. Conversely, a unexpectedly hawkish tone, even alongside a cut, would likely place downward pressure on precious metals.

The prevailing investor hesitation ahead of this major event is logical, leading to trimmed positions and realized gains.

Physical Market Fundamentals Tell a Different Story

Despite the softness in paper markets, the underlying physical landscape presents a contrasting picture. Reported inventories across major commodity exchanges have collapsed to record lows. This scarcity is fueled by robust industrial demand—particularly from the photovoltaic and electric vehicle sectors—coupled with a mining supply that struggles to keep pace.

This structural supply-demand deficit is seen as a powerful floor beneath prices, preventing more severe corrections. Experts note a growing divergence between the paper futures market and the realities of physical metal availability, with the latter becoming an increasingly critical price driver.

Path Forward Hinges on Key Levels

The immediate direction for silver hinges on its ability to maintain the $57 support zone. A successful defense could see the upward trend resume swiftly. A breakdown, however, would open the door for a move toward the $55 area. This week's Fed decision is expected to set the tone and velocity for the next significant price move. Over the longer term, the persistent supply shortfall remains the dominant bullish narrative.