Silver, Gold Prices Pull Back from Highs

Source: The Street, Alix Steel (4/25/11)

"Gold and silver prices were in for a bumpy ride Monday as profit taking and a recovering U.S. dollar capped recent highs."

Gold and silver prices were in for a bumpy ride Monday as profit taking and a recovering U.S. dollar capped recent highs.

Gold for June delivery was adding 80 cents to $1,504 an ounce at the Comex division of the New York Mercantile Exchange. Gold was backing off from its recent record of $1,518. Physical buying leveled out with the spot gold price losing $2, according to Kitco's gold index.

Silver prices had been close to conquering their record high of $50 an ounce Monday, adding as much as $3.03 to $49.10 an ounce. This 6% daily move for silver was sizable, and silver couldn't hold it, currently trading down 12 cents to $45.93 an ounce.

As the metal approached $50, buy orders were triggered where traders automatically bought silver at a pre-determined price, but the steep move, also ignited profit taking. Also putting pressure on silver were traders betting against the metal's recent rally.

Because precious metals can see corrections of 10%, which would bring silver back to the $43 level, many traders and analysts have been calling for a selloff. The assumption of a selloff has led traders to short the metal who had been forced to forfeit those positions and buy silver at much higher prices, but now they are loving the selloff.

Silver could also be experiencing a knee-jerk reaction as the metal almost touched $50.

Although technical trading was playing a big factor Monday, a weaker U.S. dollar has been the most recent catalyst. The U.S dollar index is 0.04% lower at $74.08, recovering from a deeper selloff earlier this morning which added to volatility in the metals. Low volume was also exaggerating price swings as the London market was closed.

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