Futures on precious metals dropped considerably on Wednesday amid sales by large investment funds. Funds, investing in resources, tend to own a wide range of raw materials which results in large-scale sales when they leave the market. By the end of COMEX trades May futures on silver lost USD 3.193 (7.5%) and constituted USD 39.383 for an ounce. As compared to the final result of Friday USD 48.584 (the highest for 31 years) the prices declined by 18.9%. July futures on silver lost USD 3.197 (7.5%) and equaled USD 39.388 for an ounce which is the lowest level for four weeks. In comparison to the Friday level of USD 48.599 which is a record high for the most actively traded contract the quotations lost 19%.
The fall of silver prices reverberated on other raw materials markets where the prices showed decline as well.
CME Group Inc. Company which owns NYMEX increased margin levels for futures on silver by 38% for 9 days. Its Monday evening raising was implemented on Tuesday only. However, as silver is a volatile asset characterized by low volume of trading, it failed to influence raw materials markets. Silver is a cheaper alternative to gold and so investors often transform funds into silver as the most accessible means of protecting their funds from inflation and currency volatility. Yet, the recent decrease of silver prices brought about buyers’ concerns over precious metals in general. May futures on gold showed a decline by USD 25.20 (1.6%) and reached the level of USD 1514.90 per an ounce by the end of trades. June futures on gold cheapened by USD 25.10 (1.6%) and equaled USD 1515.30 per an ounce. A weakening dollar was not able to suppress this fall that much. When the US dollar is on decrease, gold is growing attractive to holders of currencies.
