Gold, Silver Prices Volatile on Profit Taking

Source: The Street, Alix Steel  (3/28/11)

"Investors weighed recent highs ahead of the second quarter."

Gold and silver prices were volatile as investors weighed recent highs in the precious metals and looked to lock in profits ahead of the second quarter.

Gold for April delivery was losing $3 to $1,423.20 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,430 and as low as $1,410.10 while the spot gold price was dropping more than $8, according to Kitco's gold index.

Silver prices were adding $0.13 to $37.18 an ounce. Both metals, however, have bounced back from session lows as buyers stepped in to buy the metals at lower prices.

Explanations for today's selloff have run the gamut. Headline news like hawkish comments from Federal Reserve members to worries that there will be no third round of quantitative easing to improving economic growth in the U.S. were the favorites. But most traders weren't surprised by the move down.

"I've been calling for this $1,400 support and $1,450 congestion area," says George Gero, senior vice president at RBC Capital Markets. Gold has tried five times now to break, conquer and hold record highs. Prices inch higher each time but haven't been able to sustain those levels. Gold now has to overcome an intraday high of $1,448.60 an ounce.

"I see. . .that silver has been outperforming gold," argues Gero, "and I think silver is outperforming gold because it is a bridge between investment demand and industrial demand." Gero also says that gold is less speculative and that silver is where investors and traders are trying to hedge their currency positions.

Year-to-date, silver has rallied 20% while gold is relatively flat despite hitting new records.
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