Ahead of an options expiry later in the day on Tuesday, silver lost some of the wild gains it had recorded on Monday, when it courted record territory from 1980 and fell short by only $0.17. It took gold and oil with it on the way down as nervousness over a Fed meeting later in the day drove nervous investors to shed risk. However, it managed to retrieve some of its lost gains, with U.S. silver futures recovering from a 5.4% drop to $44.61 per ounce to come back to $46 in early trading.
Reuters reported that buying by options sellers when key strike prices of $45 and $50 were in danger of being exercised spurred some of the gains on Monday. But the options expiry, combined with concern over the price of oil—Saudi Aramco's chief executive expressed the kingdom's discomfort with the current price of oil—and worries over the upcoming Fed meeting sent U.S. crude futures down by more than $1, and dragged gold along for the ride. Spot gold dropped 0.6% to $1,499.60 per ounce, bringing to an end a seven-day record-setting rally that saw the per-ounce price soar to $1,518.10 on Monday. Mining companies weren’t spared either and saw some downside.
Koen De Leus, strategist at KBC Securities in Brussels, was quoted in the report saying, "There are concerns that the Fed's loose monetary policy is going to lead to inflation. Investors are cautious ahead of the meeting."