Spot silver prices tumbled on Monday, marking their biggest loss since late 2008, and gold fell more than $25 an ounce off a record high, extending losses on news that Al-Qaeda leader Osama bin Laden was killed in an operation in Pakistan.
By 10am UAE time, spot silver stood at $44.29 an ounce, down 9.24 per cent in 24 hours, a major drop from yesterday’s high of $48.71 an ounce the white metal made.
Spot gold prices, after making new lifetime highs of $1,576.30 an ounce yesterday, went down to about $1541 an ounce after the news but have since steadied, and at 10am UAE time, were trading at $1,552.34 an ounce.
Pushing the decline in precious metals was the rise in the short-term fortunes of the US dollar, which strengthened against major global currencies after the news. The beleaguered US dollar rebounded from three-year lows and crude prices slipped more than 1 per cent on Monday.
Earlier last week, gold and silver prices shot up on Fed Chairman Ben Bernanke’s dovish statements regarding the US economy, pushing prospective investors into the safety of precious metals.
The US dollar too had slumped further in international foreign exchange markets and commodities priced in dollar terms had witnessed an upsurge.
Analysts have been claiming for a few weeks now that gold and silver prices had shot up too far, too soon and were likely in bubble territory. Jeff Rhodes, CEO of the Dubai-based International Commodities, maintains that the next couple of months could see gold and silver selloffs at the global level.
In an interview last week, he said silver trading pattern was erratic and resembled the bubble scenario in 1980, when prices went from a high of over $50 per ounce to a low of $10 an ounce in a matter of a few weeks.
“If you’re long on silver, sell in May and go away,” he’d advised.