* Gold recoils after news bin Laden dead; off record higher
* Silver slides by more than 10 pct, most since October 2008
* Technical selling in thin condition compound losses
(Recasts, adds details and quotes)
By Nick Trevethan
SINGAPORE, May 2 (Reuters) - Silver prices tumbled on
Monday, marking their biggest loss since late 2008, and gold
fell more than 2 percent off a record high, extending earlier
losses on news that al-Qaeda leader Osama bin Laden was killed
in a U.S.-led operation in Pakistan.
"There was a kneejerk reaction to the news. There is a risk
of greater instability. There may be counter protests and
al-Qaeda may want to make a show that the figurehead may be
dead, but the war goes on," a trader in Sydney said.
By 0307 GMT, spot silver stood at $44.62 an ounce,
down 6.6 percent on the day, while COMEX silver for July
delivery <SIcv1> traded at $43.440 an ounce versus $48.599 on
Friday. Prices dipped as low as $42.80 for spot and $42.200 in
futures markets in holiday-thinned trade.
Spot gold prices fell a little over $5 to $1,540.39
an ounce immediately following the reports of bin Laden's death,
after earlier touching an all-time high of $1,575.79. Within
half an hour, gold had recovered to $1,545.19.
"First reaction is this would be a bearish factor, if this
means al-Qaeda's power is down," said an industry source who
declined to be named.
Markets across large parts of Asia and much of Europe were
closed for May Day and Labour day holidays, reducing the number
of market participants and making for volatile trade.
"Precious metals basically turned around in illiquid markets
on snippets of news that suggest that the risk profile will
change," said Jonathan Barratt, managing director at Commodity
Broking Services in Sydney.
"Silver was also off the board in terms of technicals and
the market decided to just smack it in the head."
Speculators scaled back their bullish bets in COMEX silver
futures and options to the lowest level since early February,
regulator data showed on Friday. []
Speculators in COMEX silver held a net long position 25,791
lots in the week ending April 26, cutting 5,413 lots, data from
the Commodity Futures Trading Commission (CFTC) showed.
The CME Group Inc said on Thursday it would raise
maintenance margins for COMEX silver futures by 13.2 percent to
$10,750 per contract from $9,500 effective Friday, April 29.
Some traders put silver's spectacular fall down to an unwind
of a short gold-silver ratio position, compounded by automated
stop-loss orders.
"There is nothing from a fundamental perspective to cause a
fall this large. Silver has been the most rapidly appreciating
of the metals in the past months and if there was one that
looked a bit frothy it was silver," said Ben Westmore,
commodities economist at National Australia Bank.
"This is mostly technical. We expect silver to be in
relatively close step with gold and while both have risen
strongly, silver may have moved a bit too far ahead."
But in spite of the falls, traders said it was too soon to
close the book on silver's astounding 170 percent rally over the
past 12 months.
"Although that was a brutal wash out of some length, silver
is now back into the original bullish trend channel, so while
$41 holds, the trend is still intact," one trader said.
In other precious metals with large-scale industrial
applications, platinum fell 1.7 percent and palladium
dropped 2.1 percent.
China's manufacturing growth slowed in April, a survey
showed on Sunday, suggesting that the government's tightening
efforts have weighed on the world's second-largest economy more
heavily than expected. []
The official purchasing managers' index for China fell to
52.9 in April from 53.4 in March, well shy of market forecasts
for an increase to 54.0.
Precious metals prices 0307 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1545.19 -18.46 -1.18 8.86
Spot Silver 44.62 -3.18 -6.65 44.59
Spot Platinum 1831.99 -32.26 -1.73 3.65
Spot Palladium 772.99 -16.36 -2.07 -3.32
TOCOM Gold 4055.00 26.00 +0.65 8.74 57732
TOCOM Platinum 4836.00 20.00 +0.42 2.98 7769
TOCOM Silver 113.90 -12.50 -9.89 40.62 5538
TOCOM Palladium 2038.00 22.00 +1.09 -2.81 417
COMEX GOLD JUN1 1545.60 -10.80 -0.69 8.74 39009
COMEX SILVER JUL1 43.51 -5.09 -10.48 40.61 41318
Euro/Dollar 1.4794
Dollar/Yen 81.51
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Additional reporting by Alejandro Barbajosa; Editing by Ed
Lane)
