Gold for June delivery lost $25.10 to settle off its session lows at $1,515.30 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded in a broad range between $1,543.50 and $1,505.50 Wednesday. The spot gold price was tanking $19, according to Kitco's gold index. Gold prices are still a long way off from $1,439, the spot price before April's monster rally.
Silver prices lost $3.19 to close $39.38, almost wiping out April's gains and off 26% from recent highs. The U.S. dollar index was losing 0.15% to $73.01 but had reversed steeper losses after the services sector contracted in April.
A volatile U.S. dollar and news of an official $116 billion bailout of Portugal weren't enough to buoy gold and silver. Both metals tried to find support levels in early trading but momentum selling dragged them lower.
Silver has led the charge down by oversold conditions and three margin hikes by the CME as the futures market tried to handle the volatility. "The reason why the exchanges and clearing houses are raising their rates is because of these violent moves we have been having in silver, anywhere from 5-10% moves on a daily overnight basis," says Anthony Neglia, president of Tower Trading, who says the hikes are not affecting his silver positions. Neglia likes silver above $42 and still believes with metal will hit $50, but that below $40 he would get bearish. He said, "$38 is your next level because that is where this whole move started from." There is some speculation that such a steep slide towards that level could ignite some tentative bargain hunting. Gold, on the other hand, is a deeper and more liquid market, which makes it able to absorb volatility better, down only 4% from its record intra-day high of $1,577 an ounce. Mihir Dange, trader at Arbitrage, thinks that margin hikes won't hit the gold market.