- ETP holdings decline to lowest in more than two years
- Prices drop after four-day rally; Fed minutes due Thursday
Silver declined from a three-month high after investors cut their holdings of the metal to the lowest in more than two years.
Investors sold 113.3 metric tons from global exchange-traded products backed by silver in the past two days, the most since June, data compiled by Bloomberg show. Holdings, now at 18,951.3 tons, are set for a sixth straight weekly decline, the longest run since 2013.
Prices climbed in the previous four days as patchy U.S. economic data prompted traders to bet that the Federal Reserve will wait until next year to raise interest rates for the first time since 2006. Higher borrowing costs curb the appeal of precious metals, which don’t pay interest or give returns like other assets such as bonds and equities. Data on Thursday that showed fewer Americans filed for jobless benefits reignited concerns that monetary tightening will come sooner.
“The Fed might indicate that they’re closer to raising rates than people originally anticipated,” Phil Streible, a senior market strategist at RJO Futures in Chicago, said in telephone interview. “We might see some stronger labor data, and that could get the Fed raising rates, and that’s not as advantageous to holding something like silver and silver ETFs.”
Silver futures for December delivery slid 2.6 percent to $15.68 an ounce at 11:37 a.m. on the Comex in New York. Prices touched $16.115 on Wednesday, the highest since June 23.
The Fed will release minutes from its September meeting Thursday afternoon. Traders put the probability of a rate increase in December at 41 percent, while the odds rise to 63 percent for a move in March, according to Fed fund futures data compiled by Bloomberg.
Gold futures for December delivery dropped 0.4 percent to $1,144.10 an ounce on the Comex. Holdings in ETPs backed by the metal fell 1.2 tons to 1,529.5 tons as of Wednesday, down for a second day.