Silver Prices Decline as Rate-Hike Bets Drive U.S. Dollar

New York (Mar 8)  Silver prices were on track for their fourth loss in five days on Wednesday amid expectations the U.S. Federal Reserve will raise interest rates next week.

May silver futures tumbled 8 cents, or 0.5%, to $17.45 a troy ounce at 7:28 a.m. ET. Prices were down as much as 0.9% earlier in the day. Since March 1, the grey metal has declined 5.7%.

Gold futures also drifted lower on Wednesday, and were trading at their weakest level since early February. The April futures contract slipped $2.70, or 0.2%, to $1,213.40 a troy ounce. Bullion has declined nearly 4% since the start of the month.

The U.S. dollar gained ground on Wednesday amid expectations the Federal Reserve will raise interest rates next week for the second time in three meetings. Fed Fund futures prices imply a nearly 82% chance of liftoff, CME data show.

The Federal Open Market Committee (FOMC) will hold its next meeting on March 14-15. The official rate statement will be accompanied by revised economic projections covering GDP, unemployment and inflation.

 

The dollar index edged up 0.1% to 101.9, putting it on track for its third consecutive advance. The greenback was trading higher against the euro, British pound and Canadian dollar.

In economic data, China’s dollar-denominated trade balance swung into a deficit in February, as imports surged. Beijing posted a trade deficit of U.S.$9.15 billion, the General Administration of Customs reported Wednesday. It had posted a surplus of $51.40 billion the month before.

Imports rose 38.1% on the month, while exports fell 1.3%.

In yuan terms, China’s deficit amounted to 60.4 billion CNY from a surplus of 354.5 billion CNY the previous month.

Source: EconomicCalendar