US silver futures tumbled to their lowest levels in six months in early trade on Tuesday, with chart-based selling and options expiration keeping the precious metal on the defensive, floor dealers said.
COMEX July silver was off 43.70 cents, or 3.4 percent, at $12.44 an ounce by 10:04 am EDT (1404 GMT) on the New York Mercantile Exchange's COMEX division, after sinking to a session low at $12.395, its cheapest level since early January.
"Today is options expiration and there was some very large institutional buying of the 12.75 puts last week, so it seems the institutions are pushing silver a bit lower today," said one.
"They are going to try and keep the lid under the 12.75 mark, so I don't think we're going to rally anywhere near that today," he added. Stop-loss orders added to the early weakness, traders said, as the market tried to catch up to the losses witnessed overnight.
"It wasn't a busy opening here in the futures. I think it's more of the pit trading against the screen. They sweep that computer and everyone plays catch-up to cover themselves," said one. Spot silver was quoted at $12.425/12.455 an ounce by 10:04 am, sharply below the late Monday quote of $12.845/12.875. London silver was fixed at $12.85 an ounce.
Declines in US gold futures were also seen fuelling the steep losses in the silver, traders said. US gold futures fell to a two-week low, pressured by a firmer dollar and softer oil prices. Gold for August delivery was down $5.30 at $649.40 an ounce, moving between $654.70 and $648.50, its lowest since June 13.
The dollar gained against the euro, while oil prices eased below $71 a barrel as investors weighed ample fuel stocks in top consumer the United States and the potential for higher Nigerian crude exports. Gold is generally seen as a hedge against oil-led inflation.COMEX estimated gold futures volume reached 17,131 lots by 9:00 am.
Spot gold fell to $646.30/646.90 an ounce, compared with $650.80/651.40 an ounce late Monday. The morning London gold fix was set at $649.55. On the fundamental front, gold and gold receivables held by eurozone central banks fell by 45 million euros to 179.866 billion euros in the week ending June 22, the European Central Bank said on Tuesday.
NYMEX July platinum slipped $22.40 to $1,269.30 an ounce. Spot platinum was last traded at $1,264/1,269 an ounce. September palladium fell $6.85 to $368.50 an ounce. Spot palladium fetched $362/366.
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