Silver prices surged in European trade on Tuesday to a 13-year peak, expanding gains for the second straight session amid strong demand on the white metal and as the dollar fell against major rivals.

Later today, the Federal Reserve is scheduled to convene to discuss policies, with the decision slated for tomorrow, widely expected to maintain rates unchanged. 

Prices

Silver prices rose 2.3% to $37.16 an ounce, the highest since February 2023, with a session-low at $36.15.

On Monday, silver rose 0.1%, the second profit in three days on short-covering.

Strong Demand

Silver rose over 12% in June so far on strong industrial and retail demand, with the white metal being far undervalued compared to gold.

US Dollar

The dollar index fell 0.1% on Tuesday against a basket of major rivals, ahead of crucial US retail sales data for May, which will provide important clues on the pace of US growth in the second quarter.

A weaker dollar makes the greenback-denominated gold futures cheaper to holders of other currencies. 

The Fed

Later today, the Federal Reserve will start holding its two-day policy meeting with the decision expected tomorrow.

The Fed will likely provide important clues on the future path of US interest rates and policy directions for the second half of the year.

Gold prices fell in European trade on Tuesday on track for the second loss in a row, moving away from a two-month high on profit-taking under pressure from the stronger US dollar.

Later today, the Federal Reserve will convene and will issue its decisions tomorrow, expected to hold interest rates unchanged for the fourth straight meeting.

The Price

Gold prices fell 0.35% today to $3374 an ounce, with a session-high at $3403.

On Monday, gold lost 1.4%, the first loss in four days on profit-taking away from a two-month high at $3451.

US Dollar

The dollar index rose over 0.1% on Tuesday and maintained the gains for the third straight session against a basket of major rivals as the Fed is widely expected to hold interest rates steady for an extended duration.

Later today, the Federal Reserve will start holding its two-day policy meeting with the decision expected tomorrow.

The Fed will likely provide important clues on the future path of US interest rates and policy directions for the second half of the year.

US Rates

According to the Fedwatch tool, the odds of a 0.25% Fed interest rate cut in June stood at 1%.

The odds of a July rate cut stood at a slightly better 19%.

Now traders expect 50 basis points of Fed rate cuts overall this year, starting with September then October. 

SPDR

Gold holdings at the SPDR Gold Trust rose 1.44 tons yesterday to a total of 941.93 tons, the highest since May 2.

The Bank of Japan fell in Asian trade against a basket of major rivals and extended the losses for the third straight session against the dollar, about to hit multi-week lows after the Bank of Japan’s policy meeting. 

The Bank  of Japan voted to hold interest rates unchanged at 0.5% at this week’s meeting, already the highest since 2008 as expected by most analysts.

The Price

The USD/JPY price rose 0.3% today to 145.11 yen per dollar, with a session-low at 144.40.

The yen lost 0.45% on Monday against the dollar, marking the second loss in a row as the markets shrugged off Israel-Iran military strikes. 

BOJ

As expected, the Bank  of Japan voted to hold interest rates unchanged at 0.5% at this week’s meeting, already the highest since 200.

The vote to maintain rates was unanimous by all nine members of the Bank of Japan’s governing board. 

Bond Purchases

The BOJ didn’t enact any changes to its gradual reduction of government purchases, amounting to a 400 billion yen cut every quarter until March 2026.

Starting April 2026, the BOJ will cut its bond purchases by 200 billion yen a quarter, with an aim at reducing the bank’s government bond holdings by 16-17% by March 2027 compared to June 2024.

Policy Statement

The BOJ asserted it’ll keep raising interest rates if inflation and economic outlook holds steady.

The bank warned against ongoing economic risks, especially the impact  of global tariffs on the economy and inflation, with the bank standing ready to intervene in case long-term interest rates rose too quickly.

Japanese Rates

The current odds of a 0.25% BOJ interest rate hike in July fell to below 25%.

Now traders await fresh Japanese data on inflation, wages, and unemployment to gather more clues.

The Bank  of Japan voted to hold interest rates unchanged at 0.5% at this week’s meeting, already the highest since 2008 as expected by most analysts.

The vote to maintain rates was unanimous by all nine members of the Bank of Japan’s governing board.