Silver surged as much as eight percent on Monday before pulling back when a failure to pierce the all time high from 1980 triggered a wave of technical selling amid record volume in the US futures market. After briefly dipping into negative territory midmorning, silver had found its footing again by early afternoon. Gold prices also recoiled from early gains of nearly 1 percent that established a new record high. Though trading was unusually thin because of Easter market holidays, the whipsaw in silver was a stark reminder of the volatile nature of this year’s best-performing major commodity, which has gained more than 150 percent since the US Federal
Reserve signaled new easing measures last August, reinvigorating a years-long precious metals rally. While often overshadowed by gold, the smaller silver market has handily outpaced the yellow metal’s 25 percent gains over the same period. Prices look set to challenge the record from three decades ago when the Hunt Brothers of Texas sought to corner the market. “This morning’s action so far does look like a potential exhaustion,” said James Dailey, portfolio manager of the Asset Strategy Fund. Silver’s technical charts are showing a classic island reversal pattern, with strong volume recorded at its sharply higher open and the subsequent reversal, Dailey said. Spot silver was up 1.9 percent at $47.54 an ounce by, sharply below a session high of $49.31.
US silver futures jumped as much as over 8 percent to an intraday high of $49.82 an ounce, just about 50 cents off its all-time peak of $50.35 hit on Jan. 18, 1980. They last traded at $47.570 an ounce. US silver volume surged to a record high, already topping 250,000 lots, more than doubled gold’s turnover, preliminary Reuters data showed. Option floor trader Dominic Cognata said that volatility in silver options “went through the moon” ahead of Tuesday’s May option expiration and Wednesday’s conclusion of the Fed’s two-day policy-setting meeting.
Trading volume was unusually high even without the participation of Britain, Canada and Australia due to the Easter Monday holiday. Silver’s sharp reversal also coincided with weakness in gold and crude oil prices. Spot gold hit a record high of $1,518.10 an ounce. It fell in tandem with silver to $1,510.60 an ounce.