Gold and silver registered decline in their prices, as commodities generally dropped in value due to a series of news hinting towards a weak outlook of the global economy. Silver future last settled in at USD $ 34.825 an ounce, falling by 3.90 percent, while gold future made a slight gain of 0.45 percent and settled at USD $ 1488 an ounce.
Silver was heading towards its biggest weakly decline since 1975 as most of the traders were forced by the increase in the margin requirements to sell off their sliver holdings. Comex’s owners, CME Group, have announced an 84 percent advance in silver margin since April 25. The minimum amount of cash that must be deposited with brokers while trading silver futures will increase to USD $ 21600 per contract after May 9. The increased margin levels cannot be maintained by the majority of the investors, due to which there has been a substantial amount of liquidation of the precious metal in the market by investors who have been discouraged by the higher margins. With lower speculation levels, market fundamentals have taken control and are dictating the price of silver now.
The European Central Bank has refused to raise interest rates to combat inflation. This has depreciated the Euro against the US Dollar, contributing to the fall in the price of all commodities. Furthermore, statistics released by the US Labour Department hinting towards a slow growth rate in the US economy have also led to the idea that the global economy is not on a healthy path of recovery, which has led to the drop in the value of gold, silver and other commodities.