Silver Reduces Losses, Approaches $75 After Largest Daily Drop in Five Years
Silver regained some of its losses in Asian trading on Tuesday, following its biggest one-day decline in over five years. This comes as a supply shortage continues to keep the metal on a path to achieve monthly gains of about one-third.
The price of the white metal rose to near $75 per ounce today, after a 9% drop in the previous session, while gold edged up slightly following its largest drop in two months. Traders took profits as technical indicators suggested the recent increases had been too rapid, exacerbated by recent price volatility due to weak market liquidity.
Bloomberg reported economic analyst Dillin Wu from Pepperstone Group stating that the price drop on Monday was “largely technical due to early profit-taking following the recent rise in precious metal prices and the unwinding of leveraged long positions,” adding that “the fundamental factors” influencing the precious metals market have not changed.
In response, some exchanges took measures to mitigate risks, with margin requirements for some silver futures contracts on the New York Mercantile Exchange raised starting Monday. When an exchange raises margin requirements, traders must deposit more funds to keep their positions open, forcing some speculators to close or reduce their trades due to insufficient additional capital to meet the new requirements.
As of 1:42 PM Singapore time, the price of silver in spot contracts increased by 3.4% to $74.90 per ounce, following a record low of $84.01 at the start of trading yesterday.
Gold prices rose 1% to $4,375.91 per ounce after falling 4.4% yesterday. Platinum prices increased by 3.4%, while palladium saw a decrease of 1.1%, both having recorded declines exceeding 10% the previous day.
