IV:Silver futures drop 2% as investors book profits ahead of Fed
Investing.com - Silver futures fell 2% on Tuesday, as investors cashed out of the market to lock in gains after prices rallied to a 14-week high on Monday.
Silver future prices surged 11.7% last week, the biggest weekly advance since September 2008. Prices are up 20% since hitting a three-year low of USD18.19 on June 28.
The recent rally prompted some investors to sell their position on profit taking and lock in gains.
On the Comex division of the New York Mercantile Exchange, silver futures for September delivery traded at USD22.70 a troy ounce during European morning trade, down 2%.
Silver futures fell by as much as 3.7% earlier in the session to hit a daily low of USD22.29 a troy ounce.
Silver prices were likely to find support at USD21.71 a troy ounce, the low from August 15 and resistance at USD23.60, Monday’s high and the strongest level since May 14.
The September contract settled down 0.7% at USD23.16 a troy ounce on Monday amid ongoing uncertainty over whether the Federal Reserve will soon begin tapering its bong-buying program continued to weigh on sentiment.
Investors remained cautious ahead of the minutes of the Fed's July meeting, due out on Wednesday, for further indications as to when the central bank may start to unwind its USD85 billion-a-month asset purchase program.
Moves in the silver price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
U.S. data on initial jobless claims and the housing sector later in the week will also be closely watched.
Market players have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
Elsewhere on the Comex, gold for December delivery shed 0.35% to trade at USD1,360.90 a troy ounce, while copper for September fell 0.55% to trade at USD3.313 a pound.
