Silver futures fell sharply during European morning hours on Tuesday, re-approaching a 30-month low after data showed that manufacturing activity in China expanded at a slower rate in April, underlining concerns over a slowdown in industrial demand for the metal.
Silver prices also struggled due to a stronger U.S. dollar, which makes dollar-priced commodities more expensive to investors holding other currencies. The dollar index was up 0.4% to trade at 88.13, the strongest level since April 4.
On the Comex division of the New York Mercantile Exchange, silver futures for May delivery traded at USD22.67 a troy ounce during European morning trade, down 2.8% on the day.
Comex silver prices fell by as much as 3.3% earlier in the session to hit a daily low of USD22.55 a troy ounce. Prices fell to a 30-month low of USD22.01 a troy ounce on April 16.
Silver prices were likely to find support at USD22.03 a troy ounce, the low from April 16 and near-term resistance at USD23.69, the previous session’s high.
China’s HSBC Flash Purchasing Managers Index, the earliest indicator of the country's industrial activity, fell to a two-month low of 50.5 in April from a final reading of 51.6 in March.
China is a major metals consumer and manufacturing numbers are often used as indicators for future demand growth.
Prices came under additional pressure after Wall Street investment bank Morgan Stanley cut its 2013 silver price forecast by 19% and its 2014 outlook by 15%.
Silver futures have lost nearly 18%, or almost USD5 per ounce, since April 12, as investors exited the market after prices broke below key support levels.
Prices of the silver metal are down nearly 55% since hitting an all-time high of USD49.81 an ounce in April 2011.
Market analysts have warned that a drop below the USD22.00-level can lead to further losses in the near-term.
Elsewhere on the Comex, gold for June delivery rose 1.9% to trade at USD1,422.45 a troy ounce, while copper for May delivery dropped 1.4% to trade at USD3.105 a pound.
Courtesy : Investing.com