Silver futures rebounded from the worst weekly slump since at least 1975 and gold gained on speculation investors will return to commodity markets after concerns over the global recovery eased and the dollar weakened.
The Standard & Poor’s GSCI Index of 24 commodities declined 11 percent last week, the most since December 2008, led by the 27 percent tumble in silver futures. The dollar fell as much as 0.5 percent against six major currencies today. Precious metals typically move inversely to the greenback.
“Gold and silver may regain strength as traders perceive last week’s commodities washout to be excessive and it isn’t viewed as a trend reversal,” said Park Jong Beom, Seoul-based trader with Tongyang Futures Co. “There’s no change in the outlook for a weaker dollar as well.”
Silver for July delivery gained as much as $2.128, or 6 percent, to $37.415 an ounce and traded at $37.27 by 11:30 a.m.
London time on the Comex, while the metal for immediate delivery climbed 4.6 percent to $37.27 an ounce.
Silver futures dropped as much as 34 percent from a 30-year high of $49.845 an ounce set April 25 after Comex owner
CME Group Inc. (CME) announced an 84 percent rise in margin requirements. A
bear market is defined by some investors as a decline of 20 percent or more. Silver spot prices climbed to a record $49.79 on April 25.
Gold for June delivery rose $15.40, or 1 percent, to $1,507 an ounce on the Comex after last week slipping 4.2 percent, the most in almost a year. The metal reached a record $1,577.40 on May 2. Immediate-delivery bullion increased 0.8 percent to $1,507.47.
Silver ‘Stampede’
Before last week, gold futures gained 9.5 percent and silver rallied 57 percent this year as concern about faster inflation,
Europe’s debt crisis, a weakening dollar and conflict in the Middle East and North Africa boosted demand for a protection of wealth. European Union officials agreed in an unannounced meeting on May 6 to reconsider the terms of the 110 billion-euro ($158 billion) lifeline
Greece received last year.
Speculators’ “stampede for the exit was responsible for last week’s ugly descent,”
Edel Tully, an analyst at UBS AG in London, said today in a report to clients. “We don’t believe that investors and speculators have completely altered their outlook for silver, however, and though hopes for $50 have suffered a blow, they have not disappeared.”
Slower growth in U.S. service industries and fewer German manufacturing orders helped drive commodities lower last week. The dollar today weakened against its major peers after advancing 2.6 percent last week, the most since August. Gold, wheat and zinc rebounded at the end of the week as U.S. payrolls exceeded economists’ forecasts, reducing concern that demand will weaken.
‘Buying Opportunity’
“It might be a buying opportunity,” said
Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg,
Germany. “The dollar has weakened and this is positive for precious metals.”
Combined holdings of exchange-traded products backed by precious metals fell to $119.4 billion last week from $132.1 billion, data compiled by Bloomberg show. Silver assets held in ETPs tumbled 1.2 percent to 14,367.77 metric tons on May 6, the lowest level in six months, the data show.
