By Nicholas Larkin & Chanyaporn Chanjaroen - Apr 3, 2013 1:48 PM GMT+0400
Silver, which entered a bear market in London yesterday, fell to an eight-month low on concern that industrial consumption isn’t strong enough at a time when demand is waning for a protection of wealth. Gold declined.
Silver closed more than 20 percent below its Oct. 4 settlement in London yesterday, the common definition of a bear market, and has underperformed gold, platinum and palladium this year. Hedge funds cut bets on silver price gains by 98 percent since October, U.S. Commodity Futures Trading Commission data show.
Silver for immediate delivery slid as much as 1.3 percent to $26.9175 an ounce, the lowest since July 25. Photographer: Chris Ratcliffe/Bloomberg
Gold declined this year on confidence that the U.S. economy is strengthening and as some Federal Reserve policy makers debated the pace of asset purchases. While the International Monetary Fund is predicting global growth of 3.5 percent in 2013, from 3.2 percent in 2012, it expects a second year of contraction in the euro area. About 53 percent of silver is used in industrial applications from televisions to batteries, the Washington-based Silver Institute estimates.
“You need a much stronger economic recovery and pickup in industrial demand for people to start looking at silver as an industrial metal,” Joni Teves, an analyst at UBS AG in London, said today by phone. “Given that gold is giving up some of its safe-haven appeal, then you would expect silver to decline as well.”
Silver for immediate delivery slid as much as 1.3 percent to $26.9175 an ounce, the lowest since July 25, and was at $27.105 by 10:38 a.m. in London. Prices are down 11 percent this year. Futures for May delivery were 0.8 percent lower at $27.04 on the Comex in New York. Futures trading volume was 74 percent above the average in the past 100 days for this time of day, according to data compiled by Bloomberg.
Gold Price
Gold lost 0.5 percent to $1,568.45 an ounce in London, after reaching $1,563.68, the lowest since March 8. The metal is down 6.4 percent this year after rallying the past 12 years in the longest run in at least nine decades.
Global government stimulus has cut the likelihood of further banking and liquidity crises and reduced the need for a protection of wealth, Credit Suisse Group AG wrote in a report today. The bank cut its 2013 gold forecast by 9.2 percent to $1,580 and lowered its silver estimate by 11 percent to $28.50.
“Silver, although it has a much larger component of industrial demand, is likely to be weighed down by the slow slide we forecast in gold,” Credit Suisse analysts including London-basedTom Kendall wrote in the report.
Investors own 19,691.8 metric tons of silver through exchange-traded products, about 0.2 percent below the March 18 record, data compiled by Bloomberg show. Holdings in the SPDR Gold Trust, the biggest gold-backed ETP, dropped to 1,208.9 tons yesterday, the lowest level since July 2011, according to the company’s website.
Palladium fell 0.4 percent to $763.23 an ounce, cutting its gain this year to 8.4 percent. Platinum was 0.6 percent lower at $1,563.50 an ounce for a 1.5 percent increase in 2013. Both metals are mostly used in pollution-control devices in vehicles and for jewelry.
To contact the reporters on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net; Chanyaporn Chanjaroen in Singapore at cchanjaroen@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter atccarpenter2@bloomberg.net
