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Silver futures edge lower in rangebound trade ahead of Fed

Published 05/01/2013, 04:42 AM
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Investing.com - Silver futures edged down modestly in rangebound trade on Wednesday, as investors looked ahead to the outcome of the Federal Reserve’s latest policy meeting later in the trading day.

On the Comex division of the New York Mercantile Exchange, silver futures for July delivery traded at USD24.11 a troy ounce during European morning trade, down 0.8% on the day.

Comex silver prices held in a range between USD24.06 a troy ounce, the daily low and a session high of USD24.33 a troy ounce.

Silver prices were likely to find support at USD23.60 a troy ounce, the low from April 26 and near-term resistance at USD24.57, the high from April 29.

Market players awaited the outcome of the Fed’s two-day policy meeting, as investors try to assess the central bank's attitude towards monetary stimulus.

Recent economic data has dampened expectations for an earlier than expected end to the central bank’s asset purchase program after recent Fed minutes showed that policymakers are divided over the benefits of ongoing monetary easing.

Data on Tuesday showed that the Chicago purchasing managers’ index dropped 49.0 in April from 52.4 in March, the lowest level since September 2009.

The dismal data came after a report last week showed that the U.S. economy grew 2.5% in the first quarter, falling short of expectations for 3.0% growth, underlining concerns over the outlook for the economic recovery.

The U.S. was to release data on ADP nonfarm payrolls report later in the trading day, while the Institute of Supply Management was release a report on manufacturing activity.

Investors also looked ahead to the outcome of the European Central Bank’s policy meeting on Thursday, amid growing expectations for a rate cut.

Data on Tuesday showed that euro zone unemployment rose to a record in March, while inflation fell more-than-expected in April.

Recent comments by ECB officials have indicated that the bank would consider cutting rates if economic data continued to deteriorate.

Silver, like gold, can benefit from such an environment of easy money because of expectations that ample liquidity would put a damper on the value of paper currencies.

Elsewhere on the Comex, gold for June delivery declined 0.1% to trade at USD1,470.35 a troy ounce, while copper for July delivery dropped 1.2% to trade at USD3.149 a pound.

Copper prices came under pressure after official data released earlier showed that China’s manufacturing purchasing managers' index ticked down to 50.6 in April from 50.9 in March.

The Asian nation is the world’s largest consumer of the industrial metal.

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