With traders pricing in near certainty that US borrowing costs will increase next month, silver investors are heading for the exit.
This month through Thursday, about US$79 million was pulled from iShares Silver Trust, the largest exchange-traded fund (ETF) backed by the metal. That would be the biggest monthly outflow since January.
Holdings in all silver-backed ETF tracked by Bloomberg worldwide fell by 2.9 million ounces, set for the first monthly decline in 10 months.
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Silver has been a victim of the same negative sentiment sweeping haven assets from gold to US Treasuries, as traders price in increasing odds that the US Federal Reserve will raise interest rates next month.
Fed Chair Janet Yellen on Thursday reinforced that speculation as she told US Congress that a rate hike “could well become appropriate relatively soon.”
LOSING APPEAL
“What’s been dominating the headlines has been the comments from Janet Yellen,” Tim Evans, chief market strategist at Long Leaf Trading Group Inc in Chicago, said in a telephone interview. “Precious metals are not interest-bearing assets and those investments are less valuable in an environment where rates are higher. Therefore, they demand a lower price.”
Silver futures for December delivery on Friday slipped 0.9 percent to settle at US$16.624 an ounce at 1:52pm on the Comex in New York, after touching US$16.43, the lowest for a most-active contract since June. The contract was 4 percent lower than last week’s US$17.328 an ounce.
GOLD
Investors have also been pulling out of gold ETFs. Holdings declined by 3.1 percent since Nov. 9, the biggest six-day slide since July 2013, data compiled by Bloomberg show.
Gold for December delivery on Friday fell 0.7 percent to US$1,208.70 an ounce, after touching US$1,201.30, the lowest for a most-active contract since February.
The precious metal was down 1.3 percent from last week’s US$1,224.30 an ounce.
BASE METALS
The strength in the US dollar curbed the appeal of industrial metals.
Iron ore with 62 percent content delivered to Qingdao, China, on Friday lost 1 percent to US$72.79 a dry tonne, taking the week’s loss to 8.8 percent, the most since the period to May 6, according to Metal Bulletin Ltd.
In Singapore, SGX AsiaClear futures slumped 15 percent this week, while futures in Dalian fell 10 percent.
Copper for three-month delivery on Friday lost 1 percent to US$5,441 a tonne to bring its weekly drop to 2 percent after a jump of 11 percent last week, the most since 2011, following US president-elect Donald Trump’s surprise win.
On the London Metal Exchange, zinc, lead and tin rose, while aluminum and nickel slipped.
A gauge of 18 base metals producers tracked by Bloomberg Intelligence climbed 0.7 percent.
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