MARKET NEWS

Yvonne Yue Li

(Bloomberg) -- Silver traded near a record high as traders bet on further monetary easing by the Federal Reserve and supply tightness. Gold slipped.

The white metal whipsawed on Tuesday, slipping as much as 2.4% before rising 1.1% to approach the all-time high of $58.8434 hit the prior day. Silver is heading for its best annual performance since 1979, after having nearly doubled this year.

Traders raced to price in a potential dovish policy shift by the US central bank under a new chair backed by President Donald Trump. Bloomberg News reported last week that White House National Economic Council Director Kevin Hassett emerged as the frontrunner to succeed Jerome Powell at the helm of the central bank. Trump said Tuesday that he will announce the new chair “early next year.”

Traders are expecting a quarter-point rate reduction at the Fed’s Dec. 9-10 meeting. Lower rates typically benefit non-yielding precious metals including silver and gold.

Silver earlier was weighed down by investor profit-taking earlier as its recent price rally was seen as too fast, too far. Viewed through the 14-day relative strength index, a gauge of overbought conditions, silver tipped above 70, a level often seen as an indication that momentum is overheated.

The metal’s more-than-8% surge over the previous two sessions was fueled by wagers on prolonged supply tightness. Since record volumes of silver flowed into London in October to ease a historic squeeze, other trading hubs have come under pressure. Inventories linked to Shanghai Futures Exchange warehouses recently fell to their lowest in a decade.