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

Joe Deaux | May 25, 2016

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

Silver futures headed for the biggest gain in two weeks 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.

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.”

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 surge to $140 an ounce by as early as 2019.

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