Choppy NY silver digests rally in early trade Fri Mar 3, 2006pm ET
NEW YORK, March 3 (Reuters) - Silver futures seesawed but still flexed muscles near 22-year highs early Friday amid concern that the market was overbought after Thursday's surge above $10 an ounce, traders said.
Speculation that U.S. regulators would soon approve a silver-backed exchange-traded fund designed to make it easier for investors to invest in the white metal sent prices up more than 4 percent on Thursday.
Momentum waned before the weekend, however, with no ruling from the Securities and Exchange Commission or word from Barclay's Global Investors International, which filed for iShares Silver Trust in June.
Silver for May delivery at 9:42 a.m. EST (1442 GMT) was off 1.3 cents at $10.195 an ounce at the COMEX division of the New York Mercantile Exchange. Moments earlier it was up, having traded from $10.165 to $10.33, the highest benchmark price since early 1984.
On Thursday, players rushed to prevent losses on previous sales and to enter long silver positions above $10 an ounce.
"Silver just hit a ton of buy stops yesterday. That really just exacerbated the move up," said Scott Meyers, analyst at Pioneer Futures. "I like the market now. How could you not? But it's a little bit overextended.
"You have got to expect volatility, once these markets stretch out like this," he added.
Spot silver was quoted at $10.18/21, unchanged from Thursday's close in New York. Friday's daily spot reference rate was fixed at $10.26 in London.
Gold scored a 24-day high, coming within trading distance of 25-year highs from early last month, before slipping in morning trade.
Gold for April delivery was down $1.90 at $568.50 an ounce, touching $567.20 and a peak of $572.50.
Benchmark futures peaked at $579.50 on Feb. 2, before profit-taking knocked prices down to $537.80 on Feb. 14.
The euro rose to $1.2052 on Friday, its highest level in a month, and traders said weakness in the dollar this week spurred interest in gold and other precious metals.
But that relationship seemed to break down on Friday as gold sagged despite currency moves that improved prices for non-dollar gold investors.
Spot gold was at $566.40/7.30, down from $568.30/9.20. Friday's morning fix was at $568.60.
"All the white metals are up. Gold is the only one that's off," said a precious metals salesman at a U.S. commercial bank.
"Overall, the market has gone a long way, but probably -- if you think about it in the context of what's going on in other white metals -- it has more liquidity, so maybe it's just a more orderly move."
NYMEX April platinum was up $8.20 at $1,063 an ounce, reaching a three-week high at $1,070. Spot fetched $1,058/1,062.
June palladium rose to its highest price since Feb. 7 and was up $4 at $307 an ounce. Spot palladium was quoted $301/305 an ounce.
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