Silver Futures Rally From Worst.... 9th May

Silver Futures Rally From Worst Weekly Loss Since 1975 as Investors Return

By Kim Kyoungwha - May 9, 2011 12:53 PM GMT+0800
http://www.bloomberg.com/news/2011-05-09/gold-may-advance-as-investors-return-after-last-week-s-rout-silver-gains.html
Silver futures rebounded from the worst weekly slump since at least 1975 on speculation investors will return to commodity markets as concerns over the global recovery eased and the dollar weakened. Gold also gained.

Silver for July delivery jumped as much as 2.9 percent to $36.31 an ounce after plunging 27 percent last week, while cash silver added 1.4 percent to $36.12. Immediate-delivery gold rose as much as 0.6 percent to $1,504.80 an ounce before trading at $1,503.75 an ounce at 12:50 p.m. in Singapore. The metal rallied 1.4 percent on May 6, paring last week’s loss to 4.4 percent.

The Standard & Poor’s GSCI Index of 24 commodities declined 11 percent last week, the most since December 2008, led by the tumble in silver futures. The dollar fell as much as 0.4 percent against six major currencies today.

“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.”

The value of all 24 commodities tracked by the S&P GSCI index was about $805 billion on May 6, compared with $891 billion on April 29, according to data compiled by Bloomberg on the number of outstanding contracts and prices of futures closest to delivery. Combined holdings of exchange-traded products backed by precious metals fell to $119 billion from $132 billion, the data show.

American Jobs

American employers added more jobs than forecast in April and previous monthly gains this year were revised up, easing concern the economy is cooling. Payrolls expanded by 244,000 last month, the biggest gain since May 2010, after a revised 221,000 increase the prior month, the Labor Department said on May 7 in Washington.

“We see no reason to panic about recent price declines,” Monty Guild, chief executive officer at Guild Investment Management Inc., wrote in a note last week. “Nothing has changed, except for the fact that some highly-leveraged speculators have been forced to sell. After the panic has ended, buying opportunities at low prices will abound.”

Immediate delivery palladium strengthened 0.7 percent to $725.75 an ounce, while platinum added 0.6 percent to $1,797 an ounce.

To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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