Silver settled down -0.86% at 49401 on muted US inflation data and as investors braced for the expected announcement by the Federal Reserve of a reduction in its bond-buying stimulus. Meanwhile the US Labor Department said consumer prices barely rose 0.1% in August but rising rents and medical care costs might prompt the Fed to begin scaling back, or tapering, its economic stimulus measures. Also the FOMC meets and economists polled by Reuters expect policy makers at the US central bank to announce a $10 billion reduction in the Fed's $85 billion monthly bond-buying program, beginning September. Market expected the Fed will start cutting monthly bond purchases by $10 billion to $75 billion when it concludes its two-day policy meeting on Wednesday. Monthly purchases of Treasuries will be scaled back by $10 billion to $35 billion, while mortgage-bond buying will remain unchanged at $40 billion. Silver prices rallied on Monday after former US Treasury Secretary Summers bowed out of the race to succeed Ben Bernanke as the next chairman of the US central bank. Summers' was perceived as being likely to unwind economic stimulus measures more aggressively than the other main contender for the post, current Fed Vice Chairwoman Janet Yellen. Moves in the silver price this year have largely tracked shifting expectations as to whether the US central bank would end its QE program sooner-than-expected. The precious metal is on track to post a loss of nearly 28% on the year as traders bet an improving US economy would lead the Fed to unwind its stimulus program by the year's end. Technically market is getting support at 48981 and below same could see a test of 48562 level, And resistance is now likely to be seen at 50119, a move above could see prices testing 50838.

Trading Ideas:

Silver trading range for the day is 48562-50838.

Silver dropped as investors bet Fed will conclude a two-day meeting announcing plans to taper its USD85 billion monthly bond-buying program

Losses were limited, however, as investors also bet the Federal Reserve will dismantle the stimulus program gradually.

U. S. Labor Department said the consumer price index rose 0.1% last month following a 0.2% rise in July.