Silver Price Slumps After Best Two-Day Jump Since 2011 as Gold Slides

London (July 5)  Silver tumbled after posting its biggest two-day advance since 2011, with precious metals declining as the dollar snapped five days of losses. Silver trading on the Shanghai Futures Exchange more than doubled from Monday.

Silver for immediate delivery lost as much as 3.9 percent to $19.5325 an ounce and traded at $19.68 by 11:29 a.m. in London, according to Bloomberg generic pricing. The metal rose 8.6 percent in the two days through Monday, the most since May 2011, briefly topping $21 for the first time in two years.

Gold dropped 0.4 percent to $1,345.32 an ounce after a four-day advance. Platinum fell 1.1 percent and palladium lost 2.5 percent. The Bloomberg Dollar Spot index added 0.2 percent, making commodities denominated in the greenback more expensive in other currencies. The metal has climbed to the highest in three years in pound terms, rising 0.5 percent to 1,021.49 an ounce.

“Gold and silver have already come a long way, so perhaps it’s not surprising to see them pull back a little,” Dan Smith, a commodities analyst at Oxford Economics Ltd. in London, said by phone. “People seem to be feeling slightly less pessimistic on the outlook for the economy.”

Gains in precious metals have come as investors choose havens over risk assets amid financial market turbulence. In the aftermath of the Brexit vote, investors are speculating that further stimulus is likely from the European Central Bank and Bank of Japan, while scaling back the odds that the Federal Reserve will raise U.S. interest rates this year. Asian stocks dropped and commodities slumped on Tuesday as the possibility of bank bailouts in Italy gave investors another reason to exercise caution.

Global investor demand for bullion remains strong. Holdings in gold-backed exchange-traded funds rose 6.6 tons to 1,959.1 tons as of Friday, the highest level since August 2013, data compiled by Bloomberg show. Assets in silver ETFs were at 20,044.1 tons, near a record of 20,232.1 tons in June.

In China, aggregate volume for silver on the Shanghai Futures Exchange was 1.93 million contracts from 854,212 contracts Monday.

Source: Bloomberg