Gold futures fell the most in one week as the dollar recovered, the metal erodes the appeal as an alternative asset classes. Silver was the biggest drop since December 2008.
The dollar climbed for the fourth consecutive session against a basket of major currencies after U.S. Treasury yields rose. Gold has climbed 28 percent this year to a record $ 1,424.30 an ounce yesterday on bets the Federal Reserve stimulus plan would erode the value of the dollar.
“Gold was not cheap, so it’s not surprising that the dollar would rally hard,” said Leonard Kaplan, president of Prospector Asset Management in Evanston, Illinois.
Gold futures for December delivery fell $ 10.80, or 0.8 percent, to settle at $ 1,399.30 at 1:34 pm on the Comex in New York, the biggest decline for a most active contract since Nov. 3.
Silver futures for December delivery plunged $ 2,041, or 7.1 percent, to $ 26,865 per ounce, the biggest drop since December 1, 2008. Yesterday, the price reached $ 29.34, a 30-year high.
CME Group Inc. ‘s Comex yesterday set margin requirements for trading in silver to $ 6,500 per contract of $ 5,000, including a collapse in precious metals after the close of floor trading.
“When the exchange rate margin demands, the nimble traders will try to dump and at a lower price,” said Adam Klopfenstein, a senior market strategist at Lind-Waldock in Chicago. “That was a bearish catalyst for the metal.”
“Volatility Jacked Up ‘
Gold jumped 5.4 percent in the previous four sessions.
“The volatility is jacked, and the question now is when trading in commodities is over,” said Frank McGhee, head dealer at Integrated Brokerage Services in Chicago.
Yesterday, open interest in gold futures reached a record 666,489 contracts, the volume in silver futures rose to an all-time high of 201,126 contracts.
At the New York Mercantile Exchange, platinum and palladium prices fell the most since May 20
Palladium futures for December delivery tumbled $ 45.90, or 6.2 percent, to $ 696.75 an ounce.
Platinum futures for January delivery fell $ 71.70, or 4 percent, to $ 1,737.90 an ounce.
source:bloomberg
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