Silver prices have been especially volatile recently, trading between $24.8845 and $25.9123, with movements related to US data and the banking sector. This volatility is due to the recent takeover of First Republic Bank by JPMorgan Chase, as traders await the US Federal Reserve’s policy decision on Wednesday.
In a press release, JPMorgan Chase announced that it had acquired failed First Republic Bank’s deposits and a “substantial amount of their assets and certain liabilities.” This acquisition brings JPMorgan Chase further into the US banking sector and addresses the long-standing banking sector turmoil that began nearly two months ago. Analysts at Brown Brothers Harriman believe this acquisition could signal the end of this banking sector turmoil.
The US Dollar has also been stronger as measured by the DXY index which measures the Greenback versus a basket of currencies. This strength comes from Monday’s positive news for the banking sector and US economic data. For example, US manufacturing improved from a three-year low in April due to increased orders and better employment numbers. Additionally, construction spending in the US increased more than expected in March. The dollar may also benefit from weaker economic data from China, where the manufacturing purchasing managers’ index (PMI) decreased to below contraction territory (50) to 49.2 from 51.9 in March.
Investors are eagerly awaiting this week’s economic data and earnings reports, as well as the Federal Reserve decision on interest rates. Analysts at TD Securities expect a 25 basis point rate hike at the next FOMC meeting, but anticipate that post-meeting communication will indicate further rate hikes may be necessary given the current disinflation trends. They also expect the Federal Reserve to acknowledge the uncertain economic environment resulting from the SVB collapse.
Overall, silver prices might continue to be volatile this week as traders digest the developments in the US banking sector and anticipate the Federal Reserve’s policy decisions. With the strength of the US dollar and the recent positive economic data, the white metal might find some support in the short term.