Gold and silver prices slipped, as the Chinese Central Bank increased the Reserves Requirement Ratio, oil prices tumbled and the US Dollar regained in value. Gold futures for June delivery fell by 0.21 percent to USD $ 1503.70 an ounce. Silver futures fell by 0.15 percent to last settle at USD $ 34.745 an ounce.
The demand of gold runs more or less in tandem with the demand in oil. As the price of oil came down, the demand of gold also declined, causing its price to fall.
Inflation concerns in China have forced the Chinese Central Bank to revise the Reserve Requirement Ration upwards, in order to trim the amount of money available to banks for lending out to customers. This move would help in declining the demand of goods and series, hence easing out inflationary expectations and having a bearish impact on gold.
The US Dollar has appreciated against a basket of six other currencies. This appreciation has increased investors’ confidence in owning riskier assets denominated in the US Dollar instead of demanding precious metals used as safe havens.
Silver is considered as a cheaper alternative to gold. Hence, when the price and demand of gold falls, silver too loses some of its value. The decline in silver futures can also be attributed to the CME Group,the owners of NYMEX’s decision to increase the margin to be deposited to brokers to gain speculative positions in the futures market.