NY silver surges with gold as specs, funds buy dips
Tue Apr 25, 2006 11:19am ET167
NEW YORK, April 25 (Reuters) - Precious metals futures all renewed their ascent in New York on Tuesday and, while prices remained some distance below recent long-term highs, brokers said even small trades were able to exaggerate price moves.
"There's a lot of scared money out there, a lot of people not knowing where these prices are going. When you get 80- or 90-cent ranges, or even a $1 range, in a day, a lot of people are shell shocked and laying back," one floor broker said.
As a result, brokers said, small orders were moving the market quite a lot and one large trade could take prices up 10 or 15 cents in one leap.
May delivery silver at the New York Mercantile Exchange's COMEX division lept well over 6 percent to $12.65 per ounce, then steadied at $12.45, up 67.5 cents.
"I haven't seen anything like this in 20 years in the business," said one broker.
Silver settled on Monday with greater than 9 percent losses in a massive profit-taking spree. Some traders said locals and speculators realized silver was ripe for picking after COMEX futures on Thursday hit a high last seen in January 1983.
Buyers, on the other hand, saw the opportunity on Tuesday to grab silver at those lows.
"There are stops above and stops below. The speculators are running those stops and trying to hit them. It's so volatile out there in either direction," said one trader.
As the rally was under way, an industry group released a forecast for even loftier levels for silver.
At a presentation, Jeffrey Christian, managing director of commodities research firm CPM Group, said, "In the next six months, I would not be surprised to see silver trade as low as $10 and as high as $16 to $17 (an ounce)."
Traders added that sharp gains in the gold and copper markets were adding to silver's strong rise.
"This is a reflex rally after margin selling. Copper and base metals are moving sharply higher also," said George Gero, vice president at RBC Capital Markets Global Futures.
Gold received an early boost from a steep drop in the dollar on Tuesday. Dollar-denominated assets like gold increase in value for overseas investors when the dollar weakens.
The euro rose sharply to a fresh seven-month high against the dollar after data showed German business sentiment rose to a new 15-year high, suggesting euro zone interest rates could continue rising.
In addition, foreign exchange dealers said, finance officials at the weekend Group of Seven meeting seemed to be sanctioning a lower dollar.
COMEX June gold rose $8.90, or 1.43 percent, to $632.80 an ounce, in a range of $621 to $638 an ounce. It remained below last Thursday's 25-year high of $649.
Spot gold was quoted at $625.80/626.70 an ounce, up from $622.80/623.80 an ounce in late in New York trade. London's afternoon fix by bullion dealers was at $634.75.
Spot silver changed hands at $12.10/12.20 an ounce, up from $11.86/11.96 an ounce previously. Tuesday's fix in London by bullion dealers was set at $12.4650
NYMEX platinum rose to $1,143 an ounce, short of Monday's new record at $1,145.50. July futures were trading $5.80 higher at $1,138.50 an ounce. Spot platinum fetched $1,125/1,130 an ounce.
June palladium was up $3.55 at $365.50 an ounce. Spot palladium increased to $359/364 an ounce.
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