Silver plunged more than 10 percent on Thursday, its biggest one-day drop in dollar terms since the Hunt Brothers price squeeze, dragging gold over 3 percent lower as panic selling snowballed across the commodities sector. Silver has now lost 30 percent this week, well above the conventional criteria of 20 percent for a bear market, since it surged to a record high near $50 an ounce last Thursday. Silver's plunge for a fifth day led the decline in commodities.
The Reuters/Jefferies CRB index was set for its biggest weekly fall since late 2008 and US crude oil fell below $100 a barrel. Speculators in the silver futures market were forced to liquidate positions after the CME Group raised margins five times in under two weeks, an 84 percent rise in trading costs that has helped provoke a nearly unprecedented sell-off.
Spot silver fell as much as 11 percent to a six-week low of $34.58 an ounce, down almost 30 percent so far this week. It was near the day's low at $34.97 by 3:19 pm EDT (1919 GMT). The metal is also heading for its biggest weekly loss since at least 1983. US silver futures volume already topped 200,000 lots, more than three times above its 250-day average and one of the busiest trading days of 2010.
Widespread investor liquidation prompted gold to slide more than 3 percent to $1,461.57 an ounce, its lowest since mid-April. Spot gold fell 3.2 percent to $1,4671.69 an ounce. COMEX June gold futures settled down $33.90 at $1,481.40, moving in a range from $1,462.50 to $1,522.10.
CBOE gold volatility index, a gauge of bullion investor anxiety, spiked about 6 percent, ahead of Friday's key US non-farm payrolls data, which should offer evidence of the ability of the economy to generate jobs, something which the Federal Reserve has flagged as a key concern. Silver selling pressure was accelerated by extremely bearish investor sentiment, as global holdings of silver in exchange-traded funds staged their biggest one-day decline this year.
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