Silver prices tumbled on Monday, making their biggest loss since late 2008, while gold trimmed losses triggered by news that al Qaeda leader Osama bin Laden was killed in a US-led operation in Pakistan. Silver, hit by a recovery in the dollar, increased futures trading margins and a technical overhang after a 170 percent rally over the last 12 months, fell as much as 10 percent to $43.04 an ounce, its lowest in nearly two weeks, before recovering to $44.92.
COMEX silver futures tumbled 13 percent to $42.20 earlier in holiday-thinned trade, and trimmed losses to $44.96. "Silver is an accident waiting to happen, and it seems like it has incurred 'bumper' damage today," said Citigroup analyst David Thurtell. Gold initially fell more than $5, as bin Laden's death was seen to take off some of its safe-haven appeal, but traders expected gold's bullish trend to remain intact, against the backdrop of the macroeconomic and political environment.
Spot gold fell over $5 to an intra-day low of $1,540.39, after hitting a record of $1,575.79 earlier. It was trading at $1,558.55 an ounce by 0638 GMT, down 0.3 percent from the previous close. COMEX gold futures reversed early losses to edge up 0.2 percent to $1,559.20.
The gold-silver ratio, used to measure the number of silver ounces needed to buy an ounce of gold, rebounded to about 35 from below 32, its lowest level since the early 1980s. This compares with an average ratio of 64 in the past 29 years. Among other precious metals with large-scale industrial applications, platinum fell 1 percent and palladium dropped 1.2 percent.