MW: Gold dips; silver partly recovers from Asia swoon
By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) — Gold and silver retreated in Asian trading Tuesday, though the metals recovered from lows earlier that hammered gold below the $1,500 level while silver briefly plunged more than 5%.
Silver for May delivery SIK11 -3.01% fell 2.3%, or $1.09 per troy ounce, to $46.02 at late afternoon in Asia, after earlier trading as low as of $44.61 an ounce.
In Monday’s session on Comex division of the New York Mercantile Exchange, the metal touched a high of $49.82 an ounce and ended at $47.149 an ounce, a rise of $1.09, or 2.4%.
Silver futures gained 8.2% last week — the largest weekly gain since early December.
Gold for June delivery GCM11 -0.33% eased 0.3% in Asia, off $4.30 to $1,505.10 an ounce, although it recovered from a session low of $1,495.90. In Monday’s U.S. session, the contract hit an intraday record of $1,519.20 an ounce and closed at a record $1,509.10.
That was gold’s sixth consecutive high-water mark and its eighth straight day of gains.
Traders awaited a policy announcement from the Federal Reserve later this week as well as comments from the top U.S. central banker Ben Bernanke for clues as to whether the central bank will end its Treasury-buying program, in June with the scheduled end of the current program — its second round of quantitative easing, or QE2.
“The market is thinking that QE3 will not be there and the people are squaring off positions ahead of that,” said ScotiaMocatta Managing Director Sunil Kashyap, in Hong Kong, referring to the trading activity in precious metals.
Eyes turn to London
He added that market activity since Monday could have been distorted by thin trading due to London’s observance of Good Friday and then again staying closed Monday.
Traders’ reaction as London comes back up to speed Tuesday should give a better snapshot of whether silver remains well-supported near its three-decade high.
One analyst said he expects further gains for silver even as talk of a global exit from loose monetary policies picks up steam.
“Metals prices will reflect global excess liquidity, negative real interest rates and supply lags,” said Jefferies & Co. analyst Michael Dudas in a note Tuesday.
He added that accumulation by exchange-traded funds is an important source of demand, while industrial demand should remain firm as there are few easy substitutes for the metal.
