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Gold, silver slump on new margin hike, stronger dollar

05-06-2011 09:06 BJT

CHICAGO, May 5 (Xinhua) -- Gold futures on the COMEX Division of the New York Mercantile Exchange plummeted and fell below 1,500 U.S. dollars per ounce on Thursday, as CME announced two increases in trading requirements for silver.

The strong rally in the greenback also helped amplify the downbeat sentiment, eroding the appeal of precious metal as alternative assets. Silver extended its sell-off.

The most active gold contract for June delivery dropped 33.9 dollars, or 2.2 percent, to 1,481.4 dollars per ounce.

The gray metal on Thursday endured another session of heavy losses as confidence was battered by the fact that CME Group Inc., which owns Comex, late Wednesday announced margin-requirement increases for silver trading, for the fourth time in 11 days.

The surging margin requirements, or the money needed to put up to trade silver, accelerated the silver dumping, which started earlier this week. The silver price lost 25.4 percent in only four sessions.

Meanwhile, the dollar index, which compares the U.S. unit to a basket of six currencies, regained some ground on Thursday, jumping from 73.095 to 73.639 during late North American trading.

The strengthening dollar also added to the negative tones in the precious metal market, as the stronger dollar makes precious metal more expensive for investors holding other currencies.

Silver for May delivery slumped 3.148 U.S. dollars, or 8 percent, to 36.24 dollars per ounce. July Platinum plunged 48.1 dollars, or 2.6 percent, to 1778.2 dollars.

 

Editor:Du Xiaodan |Source: Xinhua

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