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Silver, gold lose their luster
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August 7, 1998: 4:42 p.m. ET
Weak yen, fund selling, soft demand drive a slump in the precious metals
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NEW YORK (CNNfn) - Silver and gold prices slumped Friday as fund selling, a weak Japanese yen and lagging summertime demand revived anxiety about the two precious metals.
While gold dropped in early trading, silver, which many analysts see as benefiting from a stronger fundamental market than gold, was more the laggard on Friday.
The Nymex silver futures contract for September delivery dropped 15.7 cents to $5.273 an ounce Friday. That was the lowest level for the September contract since $5.235 on July 13.
The contract low is $4.970 set on May 29.
"There was no real news out there," said CPM Group analyst Ted Kempf, who said silver is prone to summertime swings as many companies ease back on demand. "This was mainly technical selling."
Bill Byers, a metals analyst at Bear Stearns, said a spark to the early selling was weakness in the Japanese yen. Most of the silver selling took place early in U.S. trading Friday.
The yen fell overnight after a traders said a widely anticipated speech by Japanese Prime Minister Keizo Obuchi Friday didn't offer any new details about his reform plans.
"For lack of any other outside stimulus, the weakness in the yen was an early catalyst, but realistically the [decline] was technical," Byers said.
A weaker Japanese yen, some analysts have suggested, means that many Asian consumers will not be able to revive demand for precious metals like gold and silver.
But while the yen dropped to 146.24 to the dollar in afternoon trading Friday, gold prices stayed relatively unfazed.
The Comex gold futures contract for delivery in December closed down $1.30 to a level of $290.10 an ounce.
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