Federal Open Market Committee July Meet Helps Silver Shine

Silver Bars

After the FOMC statement in the afternoon, which showed no change in the U.S. interest, there was not much movement in the Gold and Silver prices immediately. But once it was clear to traders and investors that the U.S. monetary policy had not changed aggressively the precious metal rates rallied and were at week high before closing.

The reason for the slight upswing in the silver prices was also due to another important thing mentioned in the FOMC statement that the  U.S. interest rates will rise slowly. And though the U.S. economy is not showing great upswing, there will be no downswing and a steady growth pattern is seen. Also, a major reason for Fed not to raise the interest rates is the falling inflation rate, which is currently at 1.7% versus the expectation of 2%.

After last two meetings of FOMC in this year, the grey metal prices had taken a dip as there was a rate hike by Fed.  After the first meeting on 1st February, the silver prices dropped by 0.5% on the same day. And after the second meeting on May 3, the metal lost 1.7%. The silver prices have a direct relationship with the performance of the US dollar, as this grey metal is globally priced in US dollars. This necessarily means if the dollar rises silver becomes dearer in other countries and affects the demand which in turn reduces the prices of silver.

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