Silver Rises as U.S. Housing Reports Buoy Outlook for Demand

Gold Vulnerable on Rate Outlook
  • Pending homes sales in April climb by the most since 2010
  • Holdings in gold exchange-traded funds drop for a second day

Silver futures gained the most in a week on speculation that an improving U.S. housing market will help underpin demand for the metal used in everything from insulation to solar panels, just as mine supply is set to tighten.

Contracts to purchase previously owned U.S. homes climbed in April by the most since 2010, according to a private report Thursday. That comes two days after data showing purchases of new homes surged to the highest in eight years. Industrial uses, ranging from appliance components to glass coating, account for about half of silver demand, according to the Silver Institute.

The housing figures are helping shore up investor sentiment after the metal lost more than 8 percent this month on concern over prospects for higher U.S. interest rates. Tighter monetary policy dents the appeal of precious metals, which don’t pay interest. Silver surged 29 percent through the first four months of 2016 on forecasts for falling mine output and signs that global manufacturing was stabilizing.

“Traders are all looking at the pending home sales, which were terrific, and you had good new-home sales,” George Gero, a managing director at RBC Wealth Management in New York, said in a telephone interview. “That’s been helping silver. Basically, they’re looking at it as an industrial metal, not as a precious metal.”

Silver futures for July delivery gained 0.5 percent to settle at $16.343 an ounce at 1:40 p.m. on the Comex in New York, the biggest increase since May 17.

Output from mines this year will fall for the first time since 2011, New York-based researcher CPM Group said last month. First Majestic Silver Corp. Chief Executive Officer Keith Neumeyer said in an interview this week that the metal may rise to $20 an ounce by year-end, and surge to $140 an ounce by as early as 2019.

  • Gold futures for August delivery slipped 0.3 percent to $1,222.70 an ounce on the Comex.
  • Holdings in exchange-traded funds backed by gold fell for a second day, to 1,843.4 metric tons as of Wednesday, data compiled by Bloomberg show.
  • On the New York Mercantile Exchange, platinum and palladium gained.
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