Silver price falls ahead of FOMC meeting

on Oct 27, 2014
Updated: Oct 21, 2019
Listen, Monday, October 27: The price of silver has fallen so far in today’s trading session as better than expected European Central Bank (ECB) stress test results improved equity market sentiment and curbed the precious metal’s appeal.

Silver for immediate delivery had fallen 0.22 percent, or three cents, to $17.14 as of 08:20 GMT, and was trading 11.2 percent below its 100-day simple moving average of $19.31. Spot silver came under pressure after a report released yesterday by the ECB showed that most European banks passed a test of their ability to weather a crisis, easing demand for precious metals as an alternative to equities.

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“Good news out of Europe does affect sentiment,” said Sun Yonggang, a macroeconomic strategist at Everbright Futures Co., as cited by Bloomberg. “More importantly, investors will be watching the Fed meeting this week and how that impacts the dollar and equity markets.”
The Federal Reserve Open Market Committee (FOMC) will convene tomorrow for its two-day meeting. Investors will be looking out for signs as to whether a slowdown in the global economy will affect the central bank’s monetary policy. The FOMC will release its official statement on interest rates on Wednesday at 18:00 GMT.

Fed officials are expected to end their quantitative easing asset purchasing programme, which may have a positive impact on the US currency. A stronger greenback has a negative effect on silver, as it makes dollar-denominated precious metals more expensive when converted to other currencies. The DXY dollar index, which tracks the greenback’s performance against six of its major peers, stood at 85.57 as of 09:33 GMT, down 0.18 percent intraday.

The price of silver for December delivery had shed one cent to $17.17 per ounce as of 08:43 GMT today on the COMEX in New York. According to a report by Scotiabank:
”Weekly momentum indicators are bearish but appear to have stabilized, as we note an above-25 ADX that suggests a steady (bearish) trend.”

Data from the Commodity Futures Trading Commission (CFTC), released on Friday, showed that hedge funds and money managers trimmed their net silver short bets by 452, or nearly five percent, to 8,637 contracts in the seven days ended 21 October.
Based on the most actively traded COMEX contracts, those for December delivery, with a total volume of trade in gold and silver at 21,831 contracts as of 08:43 GMT today, the gold:silver ratio stood at 71.59. The ratio had risen to multi-year highs last week, after climbing above 72 for the first time since May 2009.


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