Silver Prices Drop for Fifth Day as FOMC Meeting Under Way

London (June 13)  Silver extended its losing streak to five days on Tuesday, as investors awaited the outcome of the Federal Open Market Committee (FOMC) meeting in Washington.

July silver futures declined 15 cents, or 0.9%, to $16.80 a troy ounce at 6:54 a.m. ET.  The contract bounced around between $16.78 and $16.96 through the overnight session.

The grey metal has declined nearly 5% over the five-day skid, which knocked prices from their highest levels since mid-April.

Gold prices also fell through the early morning session. The August futures contract was down $5.20, or 0.4%, to $1,263.60 a troy ounce.

The Federal Reserve kicked off its two-day policy meeting on Tuesday against a backdrop of mixed fundamentals that point to a slower U.S. economy. Nevertheless, traders are steadfast in their view that the Fed will raise interest rates at the conclusion of its meeting Wednesday afternoon. Fed Fund futures prices imply a nearly 100% probability of liftoff tomorrow, latest CME data show.

The Fed’s rate decision will be accompanied by quarterly economic projections that could provide investors with clues about the pace and timing of future rate hikes.

Rate-hike bets have failed to generate convincing support for the U.S. dollar, which usually responds well to rising interest rates. The dollar index was last up 0.1% at 97.25, but is trading around 5.5% lower than its post-election peak.

A stronger dollar often serves as a disincentive for holding gold and silver, which are priced in the U.S. currency. Rate-hike expectations have driven the greenback higher over the past two years, a period that has been largely bearish for precious metals.

sOURCE: EconomicCalendar