* Gold slips from record $1,575.79/oz after bin Laden death
* Silver slides by more than 10 pct, most since October 2008
* Technical selling in thin condition compounds losses
(Recasts, adds details and quotes)
By Jan Harvey
LONDON, May 2 (Reuters) - Gold prices slipped from record
highs on Monday and silver posted its biggest one-day loss since
December 2008 after news that al-Qaeda leader Osama bin Laden
was killed in a U.S.-led operation in Pakistan. []
Spot gold <XAU=> fell to nearly $1,540 an ounce after
earlier hitting a fresh record high at $1,575.79. By 0913 GMT it
had recovered to $1,553.00 an ounce against $1,563.65 late in
New York on Friday.
Silver <XAG=> was bid at $45.12 an ounce against $47.80,
having earlier fallen as low as $43.04.
Oil and gold fell as news of the death stripped out some of
the risk premium that has been underpinning commodity prices,
while the dollar rebounded from three-year lows, further
pressuring gold, and stock markets climbed. [] []
Silver tumbled 10 percent, its steepest fall since late
2008, hit by a recovery in the dollar, increased margins for
futures trading and a technical overhang after a 170 percent
rally over the last 12 months to a record high last week.
"News about Osama and the 13 percent margin increase -- the
second in a week -- hit the market at the worst possible time,"
said Ole Hansen, senior manager at Saxo Bank. "Also, (there was)
news Friday evening that professionals scaled back silver
exposure by 26 percent as of last Tuesday."
"We are seeing volatility at an unprecedented level here and
the fight between the bulls and bears has entered an interesting
stage," he said, adding; "I like gold. Just a switch from silver
to gold could lend support."
The CME Group Inc <CME.O>, parent of the Chicago Board of
Trade, said on Thursday it would raise maintenance margins for
COMEX 5000 Silver <0#SI:> futures by 13.2 percent to $10,750 per
contract from $9,500 effective Friday, April 29.
This is the second rise this week following a 9.2 percent
margin increase on Monday, making it more expensive for silver
speculators to trade in. []
Data from the Commodity Futures Trading Commission showed
speculators cut bullish bets in COMEX silver futures and options
to the lowest since early February. []
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For a chart showing the gold silver ratio, click:
http://link.reuters.com/jen39r
Graphic on silver as best-performing commodity:
http://r.reuters.com/duj88r
Graphic of CFTC fund positions:
http://r.reuters.com/buv87r
More stories on rise in bullion prices []
Analysis on silver's versatility []
Analysis on India silver recycling []
More stories on bin Laden death []
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SPECTACULR FALL
Some traders put down silver's spectacular fall to an
unwinding of a short gold-silver ratio position, compounded by
automated stop-loss orders.
The gold-silver ratio, used to measure the number of silver
ounces needed to buy an ounce of gold, rebounded to about 35
from below 32, its lowest level since the early 1980s. This
compares with an average ratio of 64 in the past 29 years.
"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."
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.
While gold initially fell more than $5 an ounce after news
of bin Laden's death, traders expect its bull trend to remain
intact given the macroeconomic and political environment.
The metal remains supported by concerns over the financial
health of some euro zone economies, worries over the U.S. budget
deficit, and ultra-accommodative U.S. monetary policy.
While the stronger dollar is keeping the metal under
pressure, gold has shown in recents years that it can rise in
line with the dollar if other factors are supportive enough.
Platinum <XPT=> was at $1,853.99 an ounce versus $1,864.25,
while palladium <XPD=> was at $780.47 versus $789.35.
(Additional reporting by Rujun Shen and Nick Trevethan in
Singapore; Editing by xxxx)
