Silver 'star performer' as precious metals shine, dollar sinks

[SINGAPORE] Silver surged to the highest in more than a year and was on track for its best month since 2013 as the dollar tumbled to a 10-month low, boosting the appeal of alternative assets. Gold headed for its biggest weekly advance since February.

Silver climbed as much as 1.8 per cent to US$17.8775 an ounce and traded at US$17.8027 by 1:47 pm in Singapore for an increase of 15 per cent in April, according to Bloomberg generic pricing. Gold rose as much as 1.2 per cent to US$1,280.98 an ounce and traded at US$1,275.82 for a gain of 3.5 per cent this week.

Gold's rally was given impetus on Thursday after the Bank of Japan held off from additional easing and as weaker-than-predicted US growth supported the Federal Reserve's decision to keep monitoring data before hiking interest rates again.

The Bloomberg Dollar Spot Index slumped to the lowest since June as the yen led gains against the currency. Silver's winning streak was due to momentum and dollar weakness, according to Wayne Gordon, executive director for commodities and forex at UBS Wealth Management.

"Silver has been the star performer of the metals complex the past month, outperforming gold, which has been consolidating impressive gains," said Jordan Eliseo, a Sydney-based chief economist at trader Australian Bullion Co.

"The outperformance of silver is no surprise. The gold-silver ratio had been over 80 only a month ago, which is typically a sign silver is about to head higher."

An ounce of gold bought about 84 ounces of silver at the end of February, more than any time since the financial crisis of 2008. While the ratio has now dropped to the low 70s, in line with the 2015 average, it is still well above the long-term average of mid 60s, Suki Cooper and Nicholas Snowdon, analysts at Standard Chartered Plc, wrote in a report dated April 28.

The effect of the dollar weakness is far-reaching. The Bloomberg Commodity Index, which tracks returns for 22 raw materials, is heading for the biggest monthly gain since 2010. Other precious metals have rallied in April. Palladium has climbed 11 per cent and platinum is enjoying the best month since October.

Investors have piled into silver, increasing their holdings in exchange-traded funds for a third straight month, data compiled by Bloomberg show.

"Silver is finally showing signs of life," Gavin Wendt, founding director & senior resource analyst at MineLife, said by e-mail. "Silver usually follows gold's lead once momentum is established. It was quite simply a matter of time."

BLOOMBERG