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While the central bank is expected to hold rates steady at 4.25%-4.50%, any unexpected hawkish signals could trigger selling pressure, whereas a dovish stance may fuel another leg higher.
Silver (XAG/USD) is holding near $34.07, slightly lower after touching an intraday low of $33.86. The metal remains in a consolidation phase, balancing between dollar strength and speculation that the Fed may pivot toward rate cuts.
A more dovish Powell could attract renewed buying in silver, reinforcing its role as both a safe-haven and industrial asset.
U.S. Dollar Recovers as Fed Decision Looms
The U.S. Dollar Index (DXY) rebounded to 103.40 after hitting a five-month low, as traders adjusted their positions ahead of the Fed’s announcement. A stronger dollar typically weighs on gold, but weaker economic data has tempered its rally.
February retail sales grew just 0.2%, missing the forecasted 0.7%, while January’s downward revision to -1.2% heightened concerns about slowing consumer demand. This has put pressure on the Federal Reserve to ease monetary policy sooner rather than later.
Meanwhile, China’s latest economic stimulus measures have provided some optimism, with retail sales rising 4.0% YoY and industrial production expanding 5.9%. However, gold remains highly sensitive to Fed rate expectations, and any deviation from market consensus could dictate the next major price move.
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