Silver hovers near record ahead of Fed rate decision
Silver remained close to its all-time high on Monday, slipping slightly as traders took profits ahead of this week’s US Federal Reserve interest-rate decision, while gold recorded a modest rise.
The metal pared earlier losses after falling as much as 1.4% during Asian trading, News.Az reports, citing Bloomberg.
Silver came within one dollar of its record price of $59.3336 per ounce, reached in the previous session.
Last week also marked the strongest period since July for inflows into silver-backed exchange-traded funds, with nearly 590 tons added — a sign that investors believe the rally still has room to continue.
Throughout much of last week, silver’s 14-day relative strength index fluctuated around the level of 70, the benchmark at which traders typically consider an asset to be overbought. On Monday, the RSI stood at 70.6.
Silver has more than doubled in value this year – outshining gold’s 60% surge – and has gained recent momentum from expectations the Fed will ease monetary policy at its last meeting of the year. Swaps traders have priced in a near-certain quarter-point reduction — a tailwind for precious metals, which don’t pay interest.
More broadly, the silver market is also dealing with the aftershocks of a historic short squeeze. Lease rates — which represent the annualized cost of borrowing metal in London – remain elevated at around 6%, even after a record amount of metal flowed into the world’s biggest silver-trading hub. These flows in turn have put other centers under pressure: Shanghai’s inventories are near their lowest in a decade.
Options on Comex silver futures have also experienced a buying spree as investors position themselves against wider swings and especially further rallies. Retail traders are pouring into the market, with five-day average volume on micro futures contracts at a level only exceeded in mid-October, CME Group Inc. data show.
Meanwhile, China’s central bank added to its gold reserves for a 13th straight month, according to data released on Sunday, bringing the total to around 74.12 million troy ounces.
Silver was little changed at $58.3640 an ounce as of 3:40 p.m. Singapore time. Gold was up 0.3% at $4,212.12 an ounce, after ending last week about 1% lower. The Bloomberg Dollar Spot Index was down 0.1%. Platinum and palladium edged higher.
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