Gold fell from a record high on Monday and silver notched its biggest one-day loss in seven weeks after the killing of Osama bin Laden sapped the safe-haven premium out of precious metals. Silver bounced off early lows after falling as much as 11 percent, as speculators scaled back their bullish bets on increased futures margins and a technical overhang after a 170 percent rally over the last 12 months to a record high last week.
Gold initially rose to a record high for a fourth consecutive session, but news of the al Qaeda leader's killing by US forces sent gold down almost 2 percent. The CBOE gold volatility index, a gauge of bullion investor anxiety, posted its biggest-ever two-session gain since its inception in September last year. "People are pulling out of gold and going back into the equity market, as the news had a de-risking effect on the geopolitical environment," said Steven Faber, analyst at Haber Trilix Advisors, which manages $2 billion in assets.
Spot gold was down 0.4 percent at $1,558.09 an ounce by 2:26 pm EDT (1826 GMT), after hitting a record high for a fourth straight session at $1,575.79. US June gold futures settled up 70 cents at $1,557.10 after ranging from $1,540.30 to $1,577.40. Markets across large parts of Asia and much of Europe were closed for May Day and Labour Day holidays, reducing the number of participants and making for volatile trading. Silver was down 4.1 percent at $45.82 an ounce, having fallen as much as $5 to a two-week low of $42.58.
US silver futures volume was nearly three times above its 250-day average, one of the busiest days in 2011. The gold-silver ratio, used to measure the number of silver ounces needed to buy an ounce of gold, rebounded to about 34 from below 32, its lowest level since the early 1980s. Platinum edged up 0.3 percent to $1,869.50 an ounce, while palladium dropped 1.5 percent to $777.22 an ounce.
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