Silver Prices Dropped As Investors Looked

Silver prices dropped as investors looked ahead to a Federal Reserve policy meeting, while keeping an eye on political developments in the U.K. Investors awaited an upcoming Federal Reserve (Fed) interest rate decision and press conference from Fed chair Janet Yellen to gauge whether the Federal Reserve will continue on its monetary tightening path.

The Federal Open Market Committee (FOMC) is expected to hike its benchmark rate from 0.75-1% to 1-1.25%, after the conclusion of a two-meeting on Wednesday. Investors, however, are keen to hear from Fed chair Janet Yellen, who is slated to give a press conference, after the interest rate decision.

Investors will pay close attention to the press conference for any clues on the Fed's plan to reduce its $4.5 trillion balance sheet later this year and any possible shift in tone on future interest rate increases in the wake of weak U.S. economic data.

The U.S. economy created far fewer jobs than expected in the month of May while a slump in energy prices is expected to weigh on the pace of inflation. U.S. inflation expectations tumbled last month, with one key measure hitting its lowest level since early 2016, according to a Federal Reserve Bank of New York survey that could amplify the central bank's concern over a broad slump in prices.

Higher rates could boost the dollar, making commodities priced in the greenback more expensive for holders of other currencies. Technically market is under fresh selling as market has witnessed gain in open interest by 9.54% to settled at 15926 while prices down -529 rupees, now Silver is getting support at 38954 and below same could see a test of 38743 level, And resistance is now likely to be seen at 39497, a move above could see prices testing 39829.

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Suhani Verma

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