BW Communities

Silver Slips 10%, Gold Off Record

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Silver prices tumbled on Monday, marking their biggest loss since late 2008, and gold fell more than 2 per cent off a record high, extending earlier losses on news that al-Qaeda leader Osama bin Laden was killed in a US-led operation in Pakistan. "There was a kneejerk reaction to the news. There is a risk of greater instability. There may be counter protests and al-Qaeda may want to make a show that the figurehead may be dead, but the war goes on," a trader in Sydney said. By 0307 GMT, spot silver stood at $44.62 an ounce, down 6.6 percent on the day, while COMEX silver for July delivery traded at $43.440 an ounce versus $48.599 on Friday. Prices dipped as low as $42.80 for spot and $42.200 in futures markets in holiday-thinned trade. Spot gold prices fell a little over $5 to $1,540.39 an ounce immediately following the reports of bin Laden's death, after earlier touching an all-time high of $1,575.79. Within half an hour, gold had recovered to $1,545.19. "First reaction is this would be a bearish factor, if this means al-Qaeda's power is down," said an industry source who declined to be named. Markets across large parts of Asia and much of Europe were closed for May Day and Labour day holidays, reducing the number of market participants and making for volatile trade. "Precious metals basically turned around in illiquid markets on snippets of news that suggest that the risk profile will change," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney. "Silver was also off the board in terms of technicals and the market decided to just smack it in the head." Speculators scaled back their bullish bets in COMEX silver futures and options to the lowest level since early February, regulator data showed on Friday. Speculators in COMEX silver held a net long position 25,791 lots in the week ending April 26, cutting 5,413 lots, data from the Commodity Futures Trading Commission (CFTC) showed. The CME Group Inc said on Thursday it would raise maintenance margins for COMEX silver futures by 13.2 percent to $10,750 per contract from $9,500 effective Friday, April 29. Some traders put silver's spectacular fall down to an unwind of a short gold-silver ratio position, compounded by automated stop-loss orders. "There is nothing from a fundamental perspective to cause a fall this large. Silver has been the most rapidly appreciating of the metals in the past months and if there was one that looked a bit frothy it was silver," said Ben Westmore, commodities economist at National Australia Bank. "This is mostly technical. We expect silver to be in relatively close step with gold and while both have risen strongly, silver may have moved a bit too far ahead." But in spite of the falls, traders said it was too soon to close the book on silver's astounding 170 percent rally over the past 12 months. "Although that was a brutal wash out of some length, silver is now back into the original bullish trend channel, so while $41 holds, the trend is still intact," one trader said. In other precious metals with large-scale industrial applications, platinum fell 1.7 percent and palladium dropped 2.1 percent. China's manufacturing growth slowed in April, a survey showed on Sunday, suggesting that the government's tightening efforts have weighed on the world's second-largest economy more heavily than expected. The official purchasing managers' index for China fell to 52.9 in April from 53.4 in March, well shy of market forecasts for an increase to 54.0. (Reuters)