Silver for July delivery on the Comex in New York fell 4.4 percent to $34.65 an ounce at 8:48 a.m. in Singapore, taking losses to 29 percent this week as it plunged for a fifth consecutive day. Immediate-delivery gold gained 0.9 percent to $1,486.88 an ounce, limiting this week's drop to 4.9 percent.
The Standard & Poor's GSCI index of 24 commodities sank 6.5 percent yesterday on concern slower global growth may crimp demand and as investors sold so-called long positions, or bets on price gains. CME Group Ltd., Comex's owner, has announced an 84 percent increase in silver margins since April 25.
"The higher cash-margin requirements simply cannot be met by all participants, and when a trader can't make margin, the underlying security is often liquidated," Lachlan Shaw, a commodity analyst at Commonwealth Bank of Australia, wrote in a note. "Further silver price falls are possible."
The minimum amount of cash that must be deposited when borrowing from brokers to trade silver futures will rise to $21,600 per contract after May 9, CME Group said on May 4. That was up from $11,745 two weeks ago. Last week, the futures price jumped to a 31-year high of $49.845 an ounce.
The dollar rose 1.5 percent this week against six major currencies, set for its biggest weekly gain in four months. Asian stocks fell 1.7 percent, the biggest weekly drop since March, as rising jobless claims and lower consumer confidence in the U.S. signaled the economic recovery may be faltering.
Survey Outlook for Silver
Eight of 18 traders, investors and analysts surveyed by Bloomberg, or 44 percent, said that gold will fall next week. Seven predicted higher prices and three were neutral.
"A stronger dollar added to this weakness, although another increase in silver-margin requirements was the main impetus for the downward momentum," Marc Ground, an analyst at Standard Bank Plc, wrote in a note. "The fall in silver prices has dragged the rest of the precious metals complex lower."
There may be further declines in base metals as well as a short-term pullback in gold, and the potential drop for silver looked large, Ground said. Gold may slow its descent after central banks added the metal to their reserves, he said.
Mexico, Russia and Thailand added gold to their reserves in February and March, according to data from the International Monetary Fund this week. Central banks are raising their gold reserves for the first time in a generation amid dollar weakness.
Immediate-delivery palladium weakened 10 percent this week to $714.25 an ounce, while spot platinum shed 4.6 percent to $1,787 an ounce.
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