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Wednesday, December 8, 2010

Gold, Silver Prices Tumble as Dollar Climbs for Third Day

Gold, Silver Prices Tumble as Dollar Climbs for Third Day ; Dec. 8 (Bloomberg) -- Gold futures tumbled the most in three weeks as the dollar climbed, eroding the appeal of the precious metal as an alternative asset. Silver plunged more than 5 percent. The greenback rose for the third straight day against a basket of six major currencies on speculation that an extension of tax cuts will spur the U.S. economy. Before today, gold gained 29 percent this year, reaching a record $1,432.50 an ounce yesterday.

“Gold is dominated by short-term traders at the moment,” said Frank Lesh, a trader at FuturePath Trading LLC in Chicago. “Big players have taken a profit after record highs, and the dollar has stabilized, so short-term traders will sell gold and commodities.”

Gold futures for February delivery dropped $32.60, or 2.3 percent, to $1,376.40 at 10:59 a.m. on the Comex in New York. A close at that price would mark the biggest decline for a most- active contract since Nov. 12.

Gold assets in exchange-traded products rose 2.22 metric tons to 2,101.37 tons yesterday, the highest since Oct. 15, according to data compiled by Bloomberg from 10 providers. Holdings reached a record 2,104.65 tons on Oct. 14.

Silver holdings jumped 136.17 tons to 15,009.54 tons, data from four providers show. That marked the biggest gain in almost a month and the highest amount since at least February.

‘Potential Threat’

ETPs backed by silver represent a “new species of Hunt Brothers” that could be a “potential threat” to trading, said Jon Nadler, a senior economist at Kitco Inc. in Montreal.

The metal reached a record $50.35 an ounce on the Comex in 1980, a year after the Hunt brothers tried to corner the market.

Silver futures for March delivery tumbled $1.637, or 5.5 percent, to $28.14 an ounce, heading for the biggest decline since Nov. 10. Yesterday, the price reached $30.75, the highest since March 1980.

Gold may fall because of China’s moves toward monetary tightening, Tom Pawlicki, an analyst at MF Global Holdings Ltd. in Chicago, said in a report.

The decline may be an opportunity to buy, said Dennis Gartman, an economist and the editor of the Suffolk, Virginia- based Gartman Letter. He recommends investors purchase gold priced in euros, U.K. pounds and yen to hedge against relative dollar strength.

Palladium futures for March delivery declined $17.60, or 2.3 percent, to $721.10 an ounce on the New York Mercantile Exchange, heading for the third straight decline. On Dec. 3, the price reached $780, the highest since April 2001. Platinum futures for January delivery dropped $29.20, or 1.7 percent, to $1,676 an ounce. sourc http://www.businessweek.com/news/2010-12-08/gold-silver-prices-tumble-as-dollar-climbs-for-third-day.html For the latest updates PRESS CTR + D or visit Stock Market news Today

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