Silver on track for largest weekly loss in 2-1/2 months on US rate hike, Chinese demand concerns

Silver prices traded flat on Friday near a four-week low, on track for the second weekly loss in a row, and the largest one in 2-1/2 months, on prospects of a Federal Reserve rate hike in December, while Chinese demand weakens. 

As of 18:40 GMT, silver traded at $16.96 an ounce, near the opening price of $16.94, with a session-high at $17.05, and a low at $16.89. 

Silver lost 1.4% yesterday, the second daily loss in a row, while hitting a four-week trough at $16.82 on strong prospects of a Fed rate hike in December. 

Silver prices are down 3.5% so far this week, on track for a second weekly loss and the largest since the first week of July, on week demand levels. 

Chances of a December Fed rate hike rose to 70% from 50% before the Federal Open Market Committee's meeting. 

The FOMC maintained its projections of three rate hikes in 2018, while revising downward its projection for long-term interest rates to 2.75% from 3.0%, while forecasting just two rate hikes in 2019 and one in 2020. 

The FOMC expects to start normalizing the balance sheet from October to cut down on high levels of debt and mortgage-backed securities held by the Federal Reserve, as all the members agreed on the principles of normalizing the policy through the steps detailed in the additional document submitted alongside the usual bank statement in this meeting. 

The Committee wants to cut its monetary holdings gradually by reinvesting them through the open market system, while expecting the treasury bill sales to reach $6 billion at the start of the process, while rising to $30 billion a month in 12 months.

As for mortgage-backed security sales, they will start at $4 billion and advance to $20 billion a month after a year of the process. 

Standard and Poor's cut its long-term credit ratings for China by one degree, noting the increased risks due to the rapid credit growth in the country, which is expected to weigh on economic growth in the world's second largest economy.