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Investing.com - Silver futures rallied to the highest level since May on Monday, after a slump in U.S. home sales dampened speculation the Federal Reserve will begin to taper its bond-buying program next month.
Moves in the silver price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
On the Comex division of the New York Mercantile Exchange, silver futures for December delivery traded at USD24.09 a troy ounce during European morning trade, up 1.3%. The December contract settled up 3.05% at USD23.78 a troy ounce on Friday.
Silver futures rose by as much as 2.2% earlier in the session to hit a daily high of USD24.33 a troy ounce, the strongest level since May 6.
Silver prices are up almost 25% since hitting a three-year low of USD18.19 on June 28, placing it firmly in bull-market territory.
Silver prices were likely to find support at USD22.88 a troy ounce, Friday’s low and near-term resistance at USD24.41, the high from May 6.
Silver extended strong gains from Friday, when the Commerce Department said new home sales fell by 13.4% in July, the largest decline in more than three years. Analysts had expected U.S. new home sales to fall by 2% last month.
The weak data sparked concerns over the strength of the recovery in the housing sector and fuelled speculation over whether the Fed will start to scale back its USD85 billion-a-month asset purchase program in September.
The minutes of the Fed’s July meeting published last week showed that policymakers remain divided over the timing of a possible reduction, with almost all committee members agreeing that a change in the asset purchase program was not yet appropriate.
The minutes described recent U.S. economic data as “mixed”, indicating that plans to taper could be pushed back if the economy was to weaken.
The central bank is scheduled to meet September 17-18 to review the economy and assess policy.
Market players were looking ahead to U.S. data on durable goods orders later in the day.
Silver traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
Elsewhere on the Comex, gold for December delivery inched down 0.1% to trade at USD1,394.10 a troy ounce, while copper for September added 0.65% to trade at USD3.377 a pound.