Journal reports that Soros, Burbank are selling silver, gold
By Virginia Harrison and Polya Lesova, MarketWatch
LONDON (MarketWatch) — Gold and silver futures edged lower on Wednesday, as the latest hike to CME silver margin requirements took effect and a newspaper reported that high-profile investors George Soros and John Burbank were selling out of the metals.
Gold for June delivery GCM11 -0.27% fell $2.30 to $1,538.10 an ounce in electronic trading on Globex. The metal suffered its biggest one-day drop since March 15 on Tuesday.
Silver for July delivery SIN11 -2.95% slipped 39 cents, or 1%, to $42.20 an ounce on Globex. The contract tumbled nearly 8% in the previous session, posting its largest one-day drop since December 2008.
Traders digested a report in The Wall Street Journal, which said that George Soros’s hedge fund, a firm operated by investor John Burbank and some other leading groups have been selling gold and silver.
The Journal said the selling marked a threat to the nine-month precious-metals rally, but added that some prominent investors, such as hedge-fund manager John Paulson, continue to favor gold and silver.
Silver futures were also under pressure following the latest increase to margin requirements by Comex-operator CME Group Inc., which came into force from the close of trading Tuesday.
It marked the third margin increase delivered by the CME in about a week, which has pushed some small investors out of the silver market, according to analysts. As margins are increased investors are required to put up higher amounts to trade a futures contract.
Despite the recent dips for metals, Goldman Sachs said in a note that gold remains “one of its preferred commodities,” with prices still skewed to the upside.
“Uncertainty in currency markets and medium-term inflationary risk are likely to support investment demand,” the broker wrote. “Recent high-profile investments by prominent institutions ... confirm that institutional money is now adding to an investment trend that has hitherto been dominated by retail money.”
Geopolitical tensions in North Africa and the Middle East were also supporting the gold price, according to Goldman Sachs.
The broader suite of metals were also lower in electronic trading on Wednesday. Copper for July delivery HGN11 -1.16% fell 6 cents, or 1.3%, to $4.20 a pound.
