Silver extends fall to year-long low as dollar continues to rise


(Bloomberg) – Silver extended its decline to its lowest for over a year as the dollar rose. Gold slipped to its lowest in more than a month.

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A dollar gauge hit a nearly 11-month high, reducing the attractiveness of precious metals to foreign currency investors. Traders flocked to the greenback this week as they analyzed the implications of the battle against the US debt ceiling and a shift towards more hawkish policies on the part of the Federal Reserve.

“We continue to expect silver to underperform gold on a risk-adjusted basis as a normalization in industrial demand weighs more on the white metal, while the flow effects of QE are also expected to weigh on the money, ”said TD Securities analysts led by Bart Melek. in a note.

Spot silver fell 4.6% to $ 21.42 an ounce, the lowest intraday level since July 2020. The white metal is heading for its biggest monthly loss in a year, while the gold is on course for its biggest monthly drop since June. Both precious metals are under pressure this year as more central banks begin to signal a pullback in stimulus measures used to cushion the economic impact of the pandemic.

Federal Reserve Chairman Jerome Powell said last week that the US central bank could start cutting back on asset purchases in November and complete the process by mid-2022. The Bank of England left open the prospect of a rate hike in 2021, while Norway’s central bank started tightening policies last week.

The current high level of inflation in the United States is expected to dissipate when supply chain issues are resolved, Powell said at a Senate Banking Committee hearing, adding that the economy was still far from full employment. . The comments reassured investors that rate hikes were still a long way off. Philadelphia Fed Chairman Patrick Harker said he expects rate cuts and rate hikes to begin at the end of 2022, according to his remarks prepared at a virtual event hosted by the Risk Management Association , Philadelphia Chapter.

“In the face of rising real rates and the strengthening US dollar, we don’t think inflation is strong enough to outweigh political developments,” Morgan Stanley analysts wrote in a note. “We expect prices to come down,” averaging $ 1,621 an ounce next year, they added.

Spot silver fell 4.3% to $ 21.48 an ounce at 2:09 p.m. in New York City. Money for December delivery fell 4.4% to $ 21.485 on Comex. Gold fell 0.6% after rising to 0.7% previously. Platinum and palladium have fallen. The Bloomberg Dollar Spot Index gained 0.7%.

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