Silver Climbs to Five-Month High as Investors Pile Into ETFs

  • ETFs backed by silver climb to highest since December 2014
  • Commerzbank sees silver catching up on gold in medium term

Silver is finally catching up to the gold rally.

After trailing gains in the yellow metal for most of the year, silver is accelerating its climb, touching the highest in more than five months on Tuesday, as investor holdings in exchange-traded funds backed by the metal jumped to the most since December 2014.

Silver rallied 7.8 percent in the past four sessions, more than twice the pace of gold’s increase, helped by signs of improving industrial demand and mounting speculation that the Federal Reserve will be slow to boost interest rates. Lower rates are a boon to precious metals because they don’t offer yields or dividends.

“We see further potential for the silver price to catch up on the gold price in the medium term,” Commerzbank AG analysts including Daniel Briesemann said in a note.

Silver futures for delivery for May delivery gained 1.5 percent to settle at $16.222 an ounce at 1:50 p.m. on the Comex in New York, after touching $16.23, the highest for a most-active contract since Oct. 28. In the spot market, an ounce of gold bought as little as 77.6271 ounces of silver, the least since Feb. 9.

U.S. manufacturing expanded in March for the first time in seven months, fueled by a surge in orders, a private report showed April 1. Silver is used in industrial products ranging from electronics to solar panels.

Traders are pricing the odds of a rate increase by November at 41 percent, down from 72 percent four weeks ago, according to Fed-fund futures data compiled by Bloomberg.

Holdings in ETFs backed by silver gained 38.3 metric tons on Monday to 19,839.6 tons.

Gold futures for June delivery rose 0.2 percent to $1,260.90 an ounce on the Comex, while platinum futures advanced on the New York Mercantile Exchange. Palladium slipped.

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