Singapore: 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 28 April.
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 11:46AM, snapping a five-day losing streak. It is still on track for a 27-percent weekly loss, its biggest since the early 1980s.
The 100-day moving average at $34.39 would lend some support, traders said.
COMEX silver fell more than 5% to $34.27 in early trade, before regaining some ground to $35.05. It was poised to lose 28% over the week in its sharpest fall since March 1980, when an attempt by Texas oil tycoons the Hunt brothers to corner the silver market fell apart.
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 positions in 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-percent drop from a week earlier, its worst week since March 2009.
COMEX gold edged up 0.4% to $1,487.20 an ounce.