Silver dives to six-year low

The dollar index, which tracks the USA currency against six major peers, edged down about 0.1 percent to 99.741, after it rose to an 8-month high of 100.00 overnight, within sight of its 12-year peak of 100.39 touched on March 13. The euro had touched a low of $1.0617 last Wednesday, its lowest level since mid-April.

Since then United States economic data has strengthened with US non-farm payrolls indicating a healthy labour market.

Discount rate meetings are regularly scheduled but can be held under “expedited notice” under government regulations if the Fed posts the meeting notice less than a week in advance. Spot gold ticked up 0.3 percent to $1,072.20 an ounce by 0706 GMT on Tuesday, but not too far from last week’s low of $1,064.95, the weakest since February 2010.

The euro fell on expectations that the European Central Bank will ramp up its monetary stimulus next month and could fall toward parity with the dollar in the months ahead as the Federal Reserve begins to lift interest rates while the ECB takes the opposite course.

Other precious metals also tracked gold lower, with platinum hitting a seven-year low of $839.50 an ounce on worries about demand.

The prospect of the first increase for nearly a decade boosted the greenback, but dragged down raw materials and energy shares as the stronger dollar made them more expensive for worldwide investors.

The Fed sent its strongest signals to date that it might raise its rates Dec 15 and 16 during a policy meeting.

On Saturday, one of the top Federal Reserve official said that, raising of interest rate when the policy makers meet next month looks to be a “strong case”.

Global chief investment officer of fixed income at HSBC asset management, Xavier Baraton, said as the Fed is gearing up to normalise interest rates, real yields (or yields after inflation) have been factored and are likely to go above the 1 percent bar. But those gains were short-lived and all three currencies were down on the day against the USA dollar.

Despite last month’s decline, sales are still 3.9 percent above a year ago. Silver eased 0.4%, after slumping to $13.86 on Monday, the lowest since August 2009.

News of a previously unscheduled meeting of the Federal Reserve’s governors today, Monday, is inevitably leading to speculation that some United States interest rates could be increased well before next month’s regular meeting of the Federal Open Market Committee, which sets the benchmark Federal funds rate.