Silver declines amid budget deadlock, Yellen news

Investing.com - Silver futures declined on Wednesday, amid ongoing uncertainty over the U.S. government shutdown and the upcoming debt ceiling debate.

On the Comex division of the New York Mercantile Exchange, silver futures for December delivery traded at USD22.32 a troy ounce during European morning trade, down 0.55%.

Silver prices held in a range between USD22.22 a troy ounce, the daily low and a session high of USD22.40 a troy ounce. The December contract ended 0.25% higher on Tuesday to settle at USD22.44 a troy ounce.

Silver prices were likely to find support at USD21.50 a troy ounce, the low from October 4 and resistance at USD23.07, the high from September 20.

Silver prices struggled for upside traction due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.4% to trade at 80.41.

Investors continued to monitor negotiations over a U.S. budget impasse that has kept the federal government shut down since October 1.

Markets were also mulling over how the political deadlock in Washington will impact on negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.

President Barack Obama repeated Tuesday that he is willing to negotiate with congressional Republicans on spending cuts, but only after the government is reopened and the debt limit is raised.

Meanwhile, a White House official said Tuesday that President Obama will nominate Janet Yellen as the next Federal Reserve chairman. The announcement is scheduled for 3pm ET on Wednesday.

Yellen is perceived as being more likely to maintain the Fed’s current accommodative monetary policy stance.

Silver traders were looking ahead to the minutes of the central bank’s most recent policy-setting meeting for further clues on the direction of U.S. monetary policy.

The Fed took markets by surprise last month with a decision to keep its stimulus program on track, saying it wanted to see more evidence of a sustained economic recovery before tapering.

The shutdown has halted the release of economic reports, including payrolls data for September, fuelling speculation the Fed will hold off on any move to scale back its stimulus program.

Elsewhere on the Comex, gold for December delivery dipped 0.5% to trade at USD1,318.10 a troy ounce, while copper for December fell 0.75% to trade at USD3.267 a pound.