Silver Prices Give Back Gains as Investors Await Fed Decision

London (July 26)  Silver prices were back on the defensive Wednesday morning, as markets awaited the conclusion of the Federal Reserve’s policy meeting.

September silver futures were down 12 cents, or 0.7%, at $16.42 a troy ounce at 7:28 a.m. ET. Prices fluctuated between $16.28 and $16.48 in overnight trading.

The grey metal experienced a similar pullback Tuesday morning before reversing course later in the day. Prices would later close on a gain of 0.6%.

Silver is in the midst of a corrective rally following a sharp drop toward 15-month lows through the early part of July. Its long-term outlook remains tilted to the downside as the correlation between the dollar and precious metals has been more or less positive over the past three months.

Gold prices were also down ahead of New York trade, with the December futures contract stumbling $5.00, or 0.4%, to $1,253.50 a troy ounce.

The U.S. dollar (DXY) saw limited action in overnight trade and was last seen holding steady at 94.09.

In economic data, U.K. gross domestic product (GDP) expanded 0.3% in the second quarter, the Office for National Statistics reported Wednesday. That was in line with the median estimate and slightly above the 0.2% expansion of the first quarter. However, industrial output contracted 0.4% in the April-June period, while construction output also fell 0.9%.

In annualized terms, GDP expanded 1.7%, official data showed.

The Federal Open Market Committee (FOMC) concludes a two-day meeting on Wednesday, with an official policy statement scheduled for 2:00 p.m. ET. The Fed statement is not expected to deviate from its previous posture on monetary policy, but may provide tangible clues about its plan to reduce the $4.5 trillion balance sheet.

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