Money Never Sleeps

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Gold - Soros Exit Weighs On Gold, Silver
NEW YORK, May 17, 2011 (Dow Jones Commodities News via Comtex) --
By Tatyana Shumsky

Precious metals fell Tuesday on a stronger dollar and negative investor sentiment in the wake of hedge-fund titan George Soros' exit from the gold market.

The most actively traded contract, for June delivery, was recently down $10.90, or $0.7%, at $1,479.70 per troy ounce on the Comex division of the New York Mercantile Exchange.

Thinly traded May-delivery gold was up $1.10, or 0.1%, at $1,491.50 per troy ounce.

Soros Fund Management, the hedge fund owned by billionaire investor George Soros, has sold around 99% of its gold holdings, a late Monday filing with the Securities and Exchange Commission showed. The fund sold 4.7 million shares of physical-gold exchange-traded fund SPDR Gold Trust (GLD), reducing its holding to just 49,400 shares, valued at $6.9 million at March 31.

The news sapped confidence among gold investors as Soros had led the charge on gold over the past two years, aggressively purchasing the precious metal after dubbing it "the ultimate asset bubble."

"I assume he was sitting on a gigantic mountain of profit in that position and the prudent thing to do would've been to book some of it," said Matt Zeman, head of trading at Kingsview Financial. "Because he's leaving you're going to see a lot of small speculators jumping ship."

A moderately stronger dollar also pressured precious metals prices lower. Gold and silver futures denominated in dollars seem more expensive to holders of foreign currencies when the dollar strengthens.

The ICE Dollar Index was recently at 76.000, up from 75.612 late Monday in New York.

Silver prices weakened on the news, with silver for July delivery, the most actively traded contract, down 80.7 cents, or 2.4%, at $33.325 per troy ounce. May-delivery silver was down 44.9 cents, or 1.3%, at $33.680 per troy ounce.

Silver futures are still fragile as investors remain jittery after the early-May price correction that wiped 27% off silver's value, knocking prices off 31-year highs.

"Around that $30 level you may see it halt the bleeding, I think we're getting closer to that," said Zeman.

-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; [e-mail]

(END) Dow Jones Newswires

05-17-11 0951ET

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