Silver Extends Losing Streak Amid Stronger Dollar, Peak Federal Reserve Stimulus

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Silver futures are continuing to plummet midweek as a strengthening US dollar and a more cautious Federal Reserve have weighed on the precious metal. Gold and silver have been going through a major correction, posting their lowest levels in months. Does this mean the bull run is over for the precious metals? Or do the recent declines offer a buying opportunity for those who missed out?

November silver futures tumbled $1.398, or 5.7%, to $23.125 per ounce at 16:32 GMT on Wednesday on the COMEX division of the New York Mercantile Exchange. Silver has been on a downward trend, sliding more than 15% over the last week. Still, the white metal is up nearly 30% year-to-date.

Gold, the sister commodity to silver, crashed below $1,900 midweek. December gold futures plunged $40.80, or 2.14%, to $1,866.80 an ounce. The yellow metal has also slumped more than 5% in recent sessions, bringing its 2020 gain to below 23%.

The greenback has been rebounding to its best level in eight weeks as investors seek shelter in the traditional safe-haven asset. The US Dollar Index, which measures the buck against a basket of currencies, advanced 0.22% to 94.19, from an opening of 93.99. The index has rallied 1.3% over the last month, paring its year-to-date drop to just over 2%. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.

US DOLLARWhile the dollar’s ascent has been the biggest factor, the paucity of additional US stimulus has affected silver’s industrial demand. Today, industrial consumption accounts for about half of the metal’s demand. Many analysts are not too concerned about the metal commodities’ latest decline because they are a long-term play amid low interest rates and high inflation.

The other factor is that silver usually follows gold. With gold prices falling as well, silver’s slump should not be too surprising. Plus, based

How much further could the silver selloff go? Some think silver could test the crucial psychological level of $20 based on the US central bank ostensibly stabilizing its aggressive asset-buying campaign. Market observers say the Fed has shown its cards, and now with low rates here to stay, investors know what to expect.

In other metal markets, November copper futures shed $0.073, or 2.38%, to $2.988 per pound. November platinum futures tumbled $14.90, or 1.74%, to $842.50 an ounce. November palladium futures picked up $50.50, or 2.26%, to $2,280.10 per ounce.

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