Silver holds near two-week low ahead of Fed decision

Silver prices held steady around $38 per ounce on Wednesday, hovering near two-week lows, as investors adopted a cautious stance ahead of the Federal Reserve’s closely watched policy announcement.

The precious metal, which tends to benefit from lower interest rates due to its non-yielding nature, has faced downward pressure in recent sessions as traders recalibrate expectations around the Fed’s next move. While the central bank is widely expected to keep its benchmark interest rate unchanged at this meeting, attention has shifted to the tone of Chair Jerome Powell’s post-meeting remarks and any guidance regarding a potential rate cut in September.

Political pressure on the Fed continues to mount, with President Donald Trump renewing his public calls for lower borrowing costs to boost economic activity ahead of the 2026 midterm elections. Trump’s criticisms have reignited concerns about the central bank’s independence, particularly as speculation grows over who will lead the institution once Powell's term ends.

Fed Governors Christopher Waller and Michelle Bowman—both considered leading candidates for Powell’s potential replacement—are reportedly preparing to dissent at this month’s meeting, signaling internal divisions over the appropriate path for monetary policy.

The evolving policy outlook is further complicated by persistent geopolitical and trade tensions. Markets were rattled after high-level trade negotiations between the U.S. and China in Stockholm concluded Tuesday without an agreement to extend the current tariff truce.

With existing tariffs set to resume later this quarter unless a new accord is reached, uncertainty looms over global supply chains and commodity demand. Treasury Secretary Scott Bessent emphasized that any comprehensive deal would ultimately require final approval from President Trump, reinforcing concerns about political interference and unpredictability in trade policy.

In this tense backdrop, silver is caught between conflicting forces. On one hand, safe-haven demand could resurface if trade tensions escalate or if dovish Fed guidance signals a shift toward easing.

On the other, stronger-than-expected U.S. economic data and hawkish Fed dissents could sustain dollar strength and bond yields, capping silver’s upside in the near term. As such, market participants are likely to remain on the sidelines until greater clarity emerges from the Fed and trade developments unfold in the coming weeks.