* Gold, silver in correction phase after rapid rally

 * Spot gold may fall to $1,505 - technicals

 (Updates prices, adds comment, graphic)

 By Marie-Louise Gumuchian

 LONDON, May 4 (Reuters) - Silver and gold recovered some
losses on Wednesday as the dollar wilted on U.S. data however
precious metals remained under pressure after a strong rally in
the last few weeks.

 Mexico became the latest emerging economy to ditch some of
its holdings of U.S. dollars in favour of gold, buying over $4
billion worth of bullion between January and March, while the
currency of its biggest trading partner sits at 2-1/2-year lows.

 " The size (of the purchase) is certainly pretty chunky to
have been accomplished in that space of time. So it certianly
gives another sizeable layer of support to gold's position in
the international reserves system,"  said Credit Suisse precious
metals analyst Tom Kendall.

 U.S. silver futures have lost 14 percent over the past four
sessions, wiping out gains from the previous three weeks that
took the price to a 31-year top just below $50 on April 25.

 U.S. July silver futures SIcv1 fell to $40.96 an ounce by
1340 GMT, extending an 8-percent slide on Tuesday, when CME
Group (CME.O) raised margin requirements on silver futures for
the third time in a week.

 Spot silver XAG= was bid at $41 versus $41.64 in New York
late on Tuesday. It earlier fell more than 3 percent to $40.30
an ounce, its lowest since mid-April.

 " At the moment, we're just consolidating especially for
silver after such a strong retreat at the start of the week," 
VTB Capital analyst Andrey Kryuchenkov said.

 " The fact that the greenback has started coming off again is
an additional factor to keep the metals here." 

 Spot gold XAU= was bid at $1,536.40 an ounce, having hit a
record $1,575.79 on Monday, and compared with $1,540.38 the
previous day. COMEX gold GCcv1 shed 0.2 percent to $1,536.9.

 U.S. private employers added 179,000 jobs in April, coming
in shy of economists' expectations, a report by a payrolls
processor showed on Wednesday. [ID:nN04183024]

 The dollar hovered just above a three-year low.

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Morning Gold & Silver Market Report – 5/4/2011

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=============================================================================================


  

SINGAPORE, May 4 (Reuters) - COMEX silver dipped 3 percent
on Wednesday, extending losses from the previous session after
CME raised margins for the third time in a week, and holdings in
the iShares Silver Trust dropped to a 7-week low. 	

 FUNDAMENTALS	

 * Spot gold edged down 0.4 percent to $1,534.75 an
ounce by 0033 GMT, headed for its third consecutive day of
decline.	

 * U.S. gold futures GCcv1 inched down 0.3 percent to
$1,535.50.	

 * COMEX silver SIcv1 fell as much as 5 percent to $40.47
an ounce, its lowest in nearly three weeks, before paring some
losses to $41.28, down 3 percent from the previous close.	

 * Spot silver shed 1 percent to $41.25.	

 * On Tuesday, a near 10 percent slide in COMEX silver led a
commodity sell-off, knocking the 19-commodity Reuters-Jefferies
CRB index down 0.9 percent, its sharpest daily loss in
more than two weeks.	

 * Further dampening sentiment in precious metals, latest
U.S. data showed factory orders surged in March, a fifth
straight monthly increase, indicating a healthy manufacturing
sector well placed to support economic recovery. [ID:nN03300045]	

 * Holdings in the iShares Silver Trust , the world's
largest silver-backed exchange-traded fund, slipped 1 percent
from the previous session to a seven-week low of 10,909.06
tonnes by May 3. 

 MARKET NEWS	

 * The dollar hovered above a near three-year low against a
basket of currencies on Wednesday, as the euro held firm against
the greenback on expectations of further rate hikes by the
European Central Bank. 	

 * U.S. stocks fell on Tuesday as investors questioned the
sustainability of the rally in light of fresh worries about
earnings growth in the coming quarters. 	

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Closing Gold & Silver Market Report – 4/29/2011

SINGAPORE, April 29 (Reuters) - Silver and gold were within sight of
historic highs on Friday and could resume an uptrend as the U.S. dollar held
near three-year lows against a basket of currencies on hopes U.S. monetary
policy would stay ultra-loose, keeping inflationary price pressures high. 	

 A fresh batch of U.S. economic data in the form of rising claims for jobless
benefits failed to rescue the dollar, which had dropped to its weakest level 
since July 2008 against other currencies before recovering slightly. 	

 Silver barely moved, standing at 48.35 an ounce by 0625 GMT, after
having rallied to a record at $49.51 an ounce on Thursday. Gold eased 75
cents to $1,534.20 an ounce after hitting a lifetime high around $1,538 an ounce
in the previous session. 	

 " If the dollar continues to weaken, then it's only likely to boost gold as
well as silver as the inverse relationship between the two assets persists. I
would say that for gold I am still looking for it to hit $1,600 this year,"  said
Ong Yi Ling, investment analyst at Phillip Futures in Singapore. 	

 " In the long term, I think, if we see silver prices at such a high level,
then it could hurt the industrial demand."  	

 But dealers said strong investment demand for silver would keep the metal at
record levels, while a lack of scrap sales in the physical market suggested that
investors expected more gains. Year to date, silver was up almost 60 percent,
sharply above gold's 8 percent gain.	

 A bullish target at $1,549 per ounce is still intact for spot gold ,
based on its wave pattern and a Fibonacci projection analysis, according to Wan
Tao, who is a Reuters market analyst for commodities and energy technicals.	

 " There's some selling but I would say it's very light,"  said a dealer in
Singapore, who trades gold and silver. " It had been a very busy week, and I am
glad today is Friday. It's all quiet, finally."  	

 The CME Group Inc , parent of the Chicago Board of Trade, said on
Thursday it would raise maintenance margins for COMEX 5000 Silver < 0#SI:> 
futures by 13.2 percent, making it more expensive for silver speculators to
trade in. 

 Soaring prices hurt the bottom line of certain manufacturers, including
photography company Eastman Kodak , which said on Thursday a hike in raw
material costs, particularly silver, led to a decrease in its film business 	
revenue. 	

 Trading was subdued in Asia, with Japanese financial markets shut for a
public holiday. UK markets will be closed for the royal wedding. Premiums for
gold bars were steady in Hong Kong and Singapore. 	

 The dollar index , which tracks the currency's performance against a
basket of major currencies, was down 0.1 percent at 73.030, having plumbed a
three-year low of 72.871 on Thursday. It is down around 1.4 percent so far this
week, on track for its biggest weekly drop since a 2.5 percent fall in the week
to Jan. 16. 	

 Sentiment for the dollar took a hit this week after the Federal Reserve said
it was in no hurry to tighten its ultra-loose monetary policy, a move that gave
investors the green light to keep using the dollar as a funding currency to buy
higher-yielding assets. 	

 " It all depends on the U.S. dollar, but I would say we only see a small
amount of selling in the physical market,"  said a dealer in Hong Kong.  	

 In the energy market, crude fell on Friday, after settling at a 31-month
high in the previous session, on concerns that slowing growth in top consumer
United States may pare demand, but a weaker dollar and unrest in the Middle East
helped stem a slide in prices.