Silver futures decline with Fed in focus

Silver prices were lower on Monday, as investors awaited a Federal Reserve meeting starting tomorrow to gauge the timing of stimulus cuts.

On the Comex division of the New York Mercantile Exchange, silver futures for March delivery traded at USD19.47 a troy ounce during European morning trade, down 0.65%. Comex silver prices traded in a range between USD19.44 a troy ounce and USD19.67.

Futures were likely to find support at USD19.28 a troy ounce, the low from December 13 and resistance at USD19.73, the high from December 13.

The March contract ended up 0.78% on Friday to settle at USD19.60 a troy ounce.

Silver traders were turning their attention to the outcome of the Fed’s upcoming policy meeting on Wednesday, with some expecting the central bank to announce a small reduction in the pace of its USD85 billion-a-month asset purchase program.

Recent signs of improvement in the labor market and last week’s agreement on a two-year U.S. budget deal were seen as removing obstacles to the winding back of monetary stimulus.

Silver is down approximately 35% this year, as solid U.S. economic data underlined expectations the Fed will begin curbing stimulus.

Elsewhere on the Comex, gold for February delivery shed 0.6% to trade at USD1,227.40 a troy ounce, while copper for March delivery inched up 0.25% to trade at USD3.320 a pound.

Copper prices found support after data showed that manufacturing activity in the euro zone expanded at the fastest pace since May 2011 in December.

Market research group Markit said that its preliminary manufacturing purchasing managers’ index inched up to a seasonally adjusted 52.7 this month from a final reading of 51.6 in November. Analysts had expected the index to inch up to 51.9 this month.  

The upbeat data came after a report showed that manufacturing activity in Germany improved to a 30-month high this month.

Copper traders shrugged off disappointing manufacturing data out of top consumer China.

Data on Monday showed that the preliminary reading of China’s HSBC manufacturing index ticked down to a three month low of 50.5 in December from a final reading of 50.8 in November. Economists had expected the index to rise to 51.0.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.