New York precious metals down sharply, silver sold

New York precious metals fell heavily on Wednesday on speculative selling prompted by a rise in the dollar overnight, denting demand for dollar-priced metal overseas, traders and analysts said.
Fund-led liquidation of long positions sent Comex silver to a 2-1/2-month low, while gold fell to a 1-1/2-month nadir and platinum and palladium prices also retreated hastily.
Comex benchmark may silver shed 77.5 cents, or 11.16 percent, to $6.17 an ounce, it's lowest since February 6, after trading a session range of $6.95 to $6.14.
Silver had touched a 16-year high of $8.50 an ounce on April 2 before it broke down below $7.00 last week as the dollar began to strengthen against its key rivals.
"The commodity markets have been very sensitive to what the dollar has been doing," said David Rinehimer, head of futures research at Citicorp Global Markets.
"With funds in the metals, there tends to be exaggerated swings both on the upside and downside, and everybody's trying to get out at the same time."
The dollar shot to a near-five-month high against the euro on Wednesday before easing after Federal Reserve Chairman Alan Greenspan said he saw no sign of inflation pressures, reducing expectations in the market for a near-term interest rate rise.
Analysts had viewed a rate rise as eventually boosting the dollar, which typically dulls metals' lustier for investors.
Despite the dollar's slight turn lower in the afternoon, the stage had already been set for selling in precious as well as base metals, dealers said, as those markets had been severely overbought amid recent rallies.
"We're seeing a complete correction.
This is a revaluation of the commodities against the dollar," a metals floor trader said. The dollar was last at $1.18.
Spot silver was indicated at $6.26/29 an ounce, way down from $6.93/6.96 at Tuesday's New York close. On Wednesday's fix was at $6.42.
Comex June gold futures fell $6.90 to $391.40 an ounce, trading between $398 and $390.20.
Spot gold fetched $390.00/0.75, versus its close on Tuesday at $397.60/8.35.
On Wednesday's afternoon London fix was at $392.75.
Fund selling shoved platinum and palladium prices down as well, as speculators continued to trim their long positions.
July platinum sank $31.20 to a two-week low at $884.50 an ounce. Spot traded to $886.00/891.00.
June palladium fell $21.10 to close at a three-week low of $295.25 an ounce. Spot hit $290.00/295.00.