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Gold, Copper Rebound as Silver Futures Set for Worst Week in Three Decades

Copper recovered from its lowest level since December and gold gained. Oil dropped, falling for a fifth day, and silver futures headed for their worst week since 1975.

Crude for June delivery declined 0.7 percent to $99.09 a barrel at 2:49 p.m. after sliding 8.6 percent yesterday. Copper for three-month delivery added 0.2 percent to $8,835 a metric ton and gold for immediate delivery increased 0.9 percent to $1,486.99 an ounce. Silver futures sank 28 percent this week in New York after the Comex announced an 84 percent jump in margins.

The Standard & Poor’s GSCI index of 24 raw materials was little changed after a 6.5 percent plunge yesterday that was the most since January 2009. Silver, oil, gasoline, coffee and cotton had gained more than 23 percent this year through April 29, spurring central banks from China to India to increase interest rates to cool inflation.

“It could be a relief rally after an aggressive sell- off,” said Serene Lim, a commodity strategist at Australia & New Zealand Banking Group Ltd. in Singapore. “Traders will be very cautious at this time because tonight’s payroll data will be something to watch out for.”

Crude slumped 12 percent this week, the most since the period ended May 7, 2010, after plunging yesterday because of a surprise increase in U.S. jobless claims and a gain in the dollar. Applications for jobless benefits jumped 43,000 to 474,000 in the week ended April 30, Labor Department figures showed. Economists in a Bloomberg News survey estimated they would decline to 410,000.

Silver Plunge

A Labor Department report today may show employers hired 185,000 additional workers in April from 216,000 in March. The report is “the most important data” all week, said Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, who predicted oil will average $100 this year. “The market has started to realign itself with proper fundamentals.”

Silver for July delivery on the Comex in New York fell 3.3 percent to $35.05 an ounce, plunging for a fifth consecutive day.

The minimum amount of cash that must be deposited when borrowing from brokers to trade silver futures will climb to $21,600 per contract after May 9, CME Group said on May 4. That was up from $11,745 two weeks ago. Last week, the futures price jumped to a 31-year high of $49.845 an ounce.

“The higher cash-margin requirements simply cannot be met by all participants, and when a trader can’t make margin, the underlying security is often liquidated,” Lachlan Shaw, a commodity analyst at Commonwealth Bank of Australia, wrote in a note. “Further silver price falls are possible.”

Copper, Corn

The dollar rose 1.5 percent this week against six major currencies, set for its biggest weekly gain in four months. Asian stocks fell 1.3 percent, the biggest weekly drop since March, as rising jobless claims and lower consumer confidence in the U.S. signaled the economic recovery may be faltering.

Three-month copper on the London Metal Exchange rose as much as 0.7 percent to $8,883 a metric ton, trimming a decline of 5.4 percent in the week to yesterday on concern global growth may slow as central banks boost interest rates. The metal fell to $8,744.25 yesterday, the lowest price since Dec. 8.

“Despite recent concerns, we still believe that the physical copper market will tighten substantially over the next twelve months,” Andrew Gardner, an analyst at MF Global, wrote in a note today. The International Copper Study Group has forecast a 377,000-ton shortage of refined metal this year.

July-delivery soybeans rallied as much as 0.7 percent to $13.31 a bushel on the Chicago Board of Trade and were at $13.235 at 3:44 p.m. Tokyo time. The contract touched $13.10 yesterday, the lowest price since March 17. Corn for July delivery dropped as much as 1 percent to $7.02 per bushel, and traded at $7.0225.

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski in Singapore at akwiatkowsk2@bloomberg.net

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