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Silver futures plunge more than 2% to hit 31-month low

Published 05/16/2013, 04:37 AM
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Investing.com - Silver futures fell sharply on Thursday, trading at the lowest level since October 2010 as a broadly stronger U.S. dollar and a weak technical outlook weighed on the shiny metal.

On the Comex division of the New York Mercantile Exchange, silver futures for July delivery traded at USD22.08 a troy ounce during European morning trade, down 2.5% on the day.

Comex silver prices fell by as much as 2.6% earlier in the day to hit a session low of USD22.06 a troy ounce., the weakest level since October 5, 2010.

Silver prices were likely to find support at USD21.80 a troy ounce, the low from October 5, 2010 and resistance at USD22.87, October 5’s high.

Silver prices struggled due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 84.08.

On Wednesday, the gauge hit 84.22, the highest level since July, after a string of disappointing economic indicators in the U.S. and Europe sparked safe-haven demand for the liquid greenback.

A stronger U.S. dollar usually weighs on silver futures, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

Investors also continued to sell the metal amid a weak technical outlook.

Silver futures tumbled almost 4% on Wednesday as a bout of technical selling kicked in after prices broke below key support levels, triggering fresh sell orders amid bearish chart signals.

Elsewhere on the Comex, gold for June delivery lost 1.7% to trade at USD1,372.15 a troy ounce, while copper for July delivery shed 0.5% to trade at USD3.248 a pound.

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