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Comex silver hits 16-mth low then steadies with gold

NEW YORK: Comex silver dropped to a 16-month low on Thursday, taking out more key chart supports before finding its footing after speculators failed to follow through with more selling in gold, dealers said.

Benchmark May silver tumbled below the May 1999 low at $4.945 to bottom at $4.92 an ounce, its lowest since closing at $4.875 on Dec 2 1998. It ended at $4.983, up 0.30 cent, near its $4.99 high and resistance at the $5.00 breakout level.

The silver market erupted in stop-loss fund selling on Wednesday. Prices skidded below the $5.00 an ounce psychological support level to 10-month lows, catching-up with a sharp fall in gold, which had lost 3.3 percent since Monday.

"It continued yesterday's pattern to some extent. It's still seeing small fund selling coming into the market and trade buying as we dip down," said Bernard Penner, bullion trader at Rudolf Wolff.

"Today is a lot less volume than yesterday and it seems a little bit lost after yesterday's selloff," he said.

Silver volume was estimated at 18bout central banks drove bullion to a 20-year low of $251.70 an ounce last August.

The Bank of France called rumours it might sell gold groundless and many analysts and traders dismissed them as unlikely since France was among the 15 who signed the so-called Washington Agreement, which limits annual European official sector sales to 400 tonnes, or 2,000 tonnes over five years.

But the article did psychological damage to the bullion market, which finally spilled over into silver.

Nymex April platinum rose $4.30 to $479 an ounce on its last day before going into delivery period. Next active July rose $4.30 to $472.

June palladium fell $7.20 to $602.80. It bottomed at $595, its lowest since Feb 16 and some linked the slippage to the shutdown announced Friday of hedge funds run by troubled Tiger Management, who was said to have bought anywhere from one million to three million ounces of palladium in 1997.

"There is no volume here to prove it. It's all gossip," said one Nymex floor broker of the Tiger sales rumours.

Many market players believe the fund had exited much of this position some time ago, particularly during the palladium rally to record highs over the last three months.-Reuters