Silver, gold drop to four-year lows

Precious metal prices collapsed in the face of US dollar strength and weak demand on Wednesday, with silver sinking 5% to a more than four-year low.

Silver closed down 80 cents to US$15.32/oz in London, its lowest level since February 2010, while gold shed US$24.50 to hit a four-year low of US$1,142/oz, a 2.1% decline.

The drops came as the dollar advanced against the euro, trading above 80 euro cents for most of the day near a two-year high. The dollar's strength followed the US jobs report, which showed that the country added 230,000 jobs in October, the highest increase since June.

Gold traders in Shanghai were reporting local sales at below international prices, signifying weak demand, according to Commerzbank.

"For as long as purchasers in Asia continue to exercise restraint, gold will find it difficult to bottom out," the bank said in a note. "News of robust demand among retail investors in North America and Europe will do nothing to change this."

Silver was showing little sign of a comeback, with the metal closing in on US$15/oz, Standard Bank analyst Leon Westgate said in a report.

Barclays said earlier this week that gold prices were likely to continue to struggle in light of dollar strength and following signs that the US may move to increase interest rates sooner rather than later.