• Silver price trades sideways below $31.00 with Fed policy on the horizon.
• The Fed is widely anticipated to pivot to policy normalization.
• The likelihood for the Fed to reduce interest rates by 50 bps is higher.

Silver price (XAG/USD) oscillates below the crucial resistance of $31.00 in Wednesday’s European session. The white metal stays on the sidelines as investors await the Federal Reserve’s (Fed) monetary policy, which will be announced at 18:00 GMT.

The Fed is poised to deliver its first interest rate cut decision in more than four years as officials are worried about deteriorating labor market conditions. However, policymakers remain confident that price pressures are on track to return to the bank’s target of 2%.

With firm speculation that the Fed will pivot to policy normalization, investors will focus on the likely interest rate cut size. According to the CME FedWatch tool, 30-day Federal Funds Futures pricing data shows that the probability of the central bank cutting rates by 50 basis points (bps) to 4.75%-5.00% is 65% and the rest favors a 25-bps rate cut. Apart from the Fed’s policy decision, investors will also focus on the Fed’s dot plot and economic projections.

Ahead of the Fed policy, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, drops to near 100.80. On the contrary, 10-year US Treasury yields jump to near 3.67%. The announcement of the Fed's large rate cut would weigh heavily on the US Dollar and bond yields.