Silver Teeters on Record Losing Streak as Traders Flee Metals

Silver Is on a Losing Streak, Why and What's Next?
  • Prices hurt by slowing demand for precious, industrial metals
  • Gold futures tumble to the lowest in five years on Comex

After capping the worst stretch of losses ever, silver prices slipped again on Tuesday as analysts predicted more pain for metals markets. Gold futures extended losses to a five-year low.

Silver fell to a two-month low in London after a 13-day rout, the longest in data going back to 1950. The commodity is taking a double hit: there’s diminished demand for precious metals given the likelihood for higher U.S. interest rates, and less need for silver’s industrial applications as China’s growth slows.

“Silver is either seen as aligned to gold or aligned to industrial metals, and right now both those stories suck,” Adrian Ash, head of research at BullionVault, an online trading service, said by phone from London. “Everything that’s hurting gold is hurting silver, and everything that’s punishing industrial metals is hurting it as well.”

Silver for immediate delivery slid 0.3 percent to $14.2045 an ounce at 2:01 p.m. New York time, according to Bloomberg generic pricing. Prices are near the lowest since Aug. 26, when the metal touched a six-year low.

Silver prices could drop further, according to Georgette Boele, an Amsterdam-based strategist at ABN Amro Bank NV. She said the metal could reach as low as $13 by the end of the year because investor sentiment is so negative.

Silver Selling

After being the most bullish since at least 2006, money managers cut their bets on higher silver prices by 50 percent in the past two weeks, U.S. government data show. Investors have been steadily selling from silver-backed exchange-traded products since July and holdings are near the lowest since 2013, data compiled by Bloomberg show.

Fed-fund futures show a 66 percent chance that the Federal Reserve will raise rates at its December meeting, up from a 50 percent probability at the end of October. Higher borrowing costs curb the appeal of precious metals because they don’t pay interest or give returns like other assets such as bonds or equities.

“Precious metals and base metals are under pressure, so it is almost impossible for silver to decouple from this,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by e-mail. “It’s a combination of U.S. dollar strength and China demand concerns that pushes the entire complex lower.”

Gold futures for December delivery fell 1.4 percent to settle at $1,068.60 an ounce on the Comex in New York, and touched $1,064.40, the lowest in five years.

On the New York Mercantile Exchange, platinum futures for January delivery slid 1.2 percent to $855 an ounce, and palladium futures for December delivery dropped 0.9 percent to $546.50 an ounce.