Silver futures tumble 2% on U.S. debt deal progress

NEW YORK (Oct 15)   Silver futures tumbled to a three-week low on Tuesday, as investors were encouraged by signs of progress by U.S. lawmakers to end the standoff in Washington ahead of Thursday’s deadline.

On the Comex division of the New York Mercantile Exchange, silver futures for December delivery traded at USD20.93 a troy ounce during European morning trade, down 1.95%.

Silver prices fell by as much as 2.05% earlier in the session to hit a daily low of USD20.91 a troy ounce, the weakest level since October 1.

The December contract ended 0.45% higher on Monday to settle at USD21.35 a troy ounce.

Silver prices were likely to find support at USD20.64 a troy ounce, the low from October 1 and resistance at USD21.68, the previous session’s high.

Senate Majority Leader Harry Reid said Monday that “tremendous progress” had been made towards a deal, fuelling hopes that a compromise can be reached.

If an agreement to raise the federal borrowing limit is not struck ahead of Thursday’s deadline, the U.S. will face an unprecedented sovereign debt default.

However, any potential deal will still have to be approved by the House of Representatives, where Speaker John Boehner would have to decide whether to allow a vote or demand federal spending cuts.

Elsewhere on the Comex, gold for December delivery lost 1% to trade at USD1,264.10 a troy ounce, while copper for December inched up 0.1% to trade at USD3.306 a pound.

Copper traders looked ahead to a raft of Chinese economic data later in the week, including reports on gross domestic product, industrial production and retail sales.

Trade data over the weekend showed that inbound Chinese copper shipments totaled 457,847 metric tons last month, the highest since March 2012. The figure was nearly 18% higher than copper imports in the previous month.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.