Silver crumbles to a 33-month low

Silver followed golds direction down the stream and even outperformed its steep decline, falling 7.5% to hit a 33-month low.

On the Comex division of the New York Mercantile Exchange, silver futures for July delivery traded at $20.023 an ounce at 9:41 GMT, down 7.40% on the day. The precious metal dropped to $19.890 an ounce earlier during the session, marking a 33-month low.

This comes after yesterday Ben Bernanke announced that the central bank won’t scale down its monetary easing program just yet, but that is highly possible to happen within the end of the year, provided the needed stable recovery signs. According to Bernanke, Fed’s moves are tied to what happens in the economy and the central bank has no fixed plan, sentiment points at reducing bond purchases. Bernanke said that if the economy continues to improve in line with Fed’s projections, it would be “appropriate to moderate the monthly pace of purchases later this year”, and end the program as the unemployment rate drops do 7%, which Fed expects to happen around mid-2014.

The Federal Reserve expects the U.S. economy to grow between 2.3% and 2.6% in 2013. The unemployment rate is projected to stand at 6.5%-6.8% by the end of 2014 and inflation should near the targeted 2%.

The announcements after FOMCs meeting caused the dollar to surge, extending gains versus all its major counterparts. The dollar index, which tracks the greenback’s performance against its major peers, rose by nearly 0.8% for the day and surpassed 82, pushing dollar-priced commodities down. A stronger dollar decreases the appeal of raw materials as an alternative investment and makes them more expensive for foreign currency holders.

Meanwhile copper for July dropped to a two-month low on QE outlook and China manufacturing slowdown.

Elsewhere on the precious metals market, gold fell to a 2 1/2-year low. The yellow metal traded at $1 305.75 at 9:27 GMT, down 4.97% for the day. Platinum for July delivery also plunged, but by only 2.03%, standing at $1 395.05 an ounce. Platinum ranged between days high and low at $1 419.10 and $1 394.80 respectively. Palladium futures for September delivery lost 2.24% on the day and traded at $680.80, varying between days high at $695.80 and low of $680.60 an ounce.