[miningmx.com] — SILVER rebounded on Friday from its biggest one-day dollar fall since 1980, and gold also recovered as cheaper prices lured in Asian investors keeping a wary eye on US employment data due later in the day.
Buyers are taking advantage of a fall in spot gold of more than $100 from a record high in just four days and spot silver that has shed 30% from a record of $49.51 hit on April 28.
Spot silver slumped by 12% on Thursday after another margin hike by the CME Group on its COMEX silver futures increased the cost of the trading the metal, dragging gold down 3% and triggering a brutal sell-off that sent commodities
from oil to copper sharply lower.
“Prices have dropped so much over the past few days and bargain hunters are in,” said Ong Yi Ling, an analyst at Phillip Futures, adding that the weak outlook for US employment data helped add to the lure of gold.
Spot silver gained nearly 1% to $35 an ounce by 06:16 GMT, snapping a five-day losing streak. It is still on track for a 27% weekly loss, its biggest since the early
1980s.
The 100-day moving average at $34.39 would lend some support, traders said.
A worse-than-expected non-farm payrolls figure, after data on Thursday showing US payroll growth eased in April, could further fuel the commodities sell-off by deepening fears that the world’s largest economy is not out of woods yet.
Gold though could benefit from its status as a safe haven.
“Gold is a better bet than silver or oil, as losses would be capped by its safe-haven status,” said Ong of Phillip Futures.
The reaction of the dollar to non-farm payrolls is also critical. The greenback was down slightly on Friday, after rising 1.5% the previous day, it’s biggest gain in over
six months.
Investors rushing to exit the market trimmed their positionsin the iShares Silver Trust, the world’s biggest silver-backed exchange-traded fund, by more than 1% after a 5% decline the previous day. Holdings stood at 10,268.92 tonne by
May 5, the lowest since early November.
Spot gold rose by more than 1% to $1,486.96 an ounce, headed for a 5%-drop from a week earlier, its worst week since March 2009.
“From a fundamental point of view, people are really starting to question where the US economic recovery is and whether asset prices should be at such high levels,” said Jonathan Barratt, managing director of Commodity Broking Services in Sydney.
“When we roll off the stimulus in June, what next? Is the US economy going to fall flat or behave itself?”
