Silver IETF approvedhttps://za.today.reuters.com/news/newsArticle.aspx?type=businessNews&storyID=2006-04-27T153700Z_01_ALL756124_RTRIDST_0_OZABS-MARKETS-PRECIOUS-COMEX-20060427.XML
NEW YORK (Reuters) - Silver and other precious metals futures rebounded in choppy trading on Thursday after U.S. regulators approved the first silver-backed security that traders expected would hoist investment demand.
Silver briefly surged about 2 percent after the Securities and Exchange Commission said it had approved a registration statement for a exchange-traded fund from Barclays Global Investors called iShares Silver Trust.
That decision removed the final regulatory obstacle to trading in the innovative fund.
Silver and other metals were gyrating wildly by midmorning with market players reluctant to put on large positions as they digested the ETF news.
"It's mainly speculative positioning, but trading is very thin on the exchange floor," said a precious metals dealer at an international bank.
Silver for July delivery on the New York Mercantile Exchange's COMEX division rose 9.1 cents at $13.03 per ounce by 11:11 a.m. EDT, trading a wide range of $12.3150 to $13.25. Nearby May silver was up 9.5 cents to $12.95.
Silver, used in jewelry, fabricated products and industrial applications, reached a 23-year high last week in futures at $14.69 on anticipation of the ETF launching soon.
IShares Silver Trust is designed to track the price of silver bullion that will be stored in vaults in allocated accounts and trade like listed shares on an exchange.
Silver prices had earlier dropped about 4.5 percent Thursday as gold and the precious group fell after China surprised global markets by raising interest rates,
Comments from U.S. Federal Reserve chief Ben Bernanke that a pause in U.S. rate hikes was possible and that U.S. imbalances may affect the dollar gave some support to metals, however.
Spot silver by midmorning rose to $12.99/13.09 an ounce, against $12.92/13.02 on Wednesday. Thursday's fix was at
$12.52.
George Gero, vice president of RBC Capital Markets Global Futures, said an early flurry of liquidation in gold and the precious group was sparked by worries over the China news.
"The Chinese hike is a signal to cool (its economy) and it may strengthen the yuan," Gero said.
China's central bank was raising its benchmark one-year lending rate to 5.85 percent from 5.58 percent to try to cap a surge in credit and investment that might destabilize its fast-growing economy.
COMEX June gold gained $2.50 to $644.50 an ounce, dealing between $627 and a session peak of $646.20.
That peak fell just short of last Thursday's 25-year high at $649, fueled by weeks of investment buying amid tensions over Iran, high energy prices and uncertainty over the U.S. dollar.
One analyst doubted that the 27-point increase in China's one-year rate is deterring would-be gold buyers.
"The idea that raising rates in any and all currencies will now start distracting those who buy gold would imply that the gold market is built on very shaky footings and that investors and speculators alike are just itching to bolt away from gold at any moment," said Jon Nadler, analyst with Kitco.
Gold traders were now awaiting Friday's report by International Atomic Energy Agency Chief Mohamed ElBaradei to the U.N. Security Council on Iran's compliance with a demand to halt uranium enrichment.
Spot gold was worth $640.40/641.40 an ounce, vs. $640.10/1.10 an ounce late Wednesday in New York. London's afternoon fix by bullion dealers hit $638.
NYMEX July platinum rose $11.80 to a new record high of $1,159.80 an ounce. Spot platinum reached 1,147/52.
June palladium fell $3.65 to $365.50 an ounce. Spot palladium last fetched $362/367 an ounce.