Silver Regains Record Highs, US Home Sales on Tap

Silver gains 7% in single session to a spot record high above $49.70/oz. COT data shows speculators not impressed with JPY rebound. US March new home sales expected to show slight improvement. US earnings season shifts into higher gear with Netflix and Express Scripts.

Thin holiday liquidity in the early European hours accentuated volatility in the precious metals, sending silver sharply higher by as much as 7%. Stop hunting saw prices briefly rise above $49.70 - above the early 1980 spot market highs when Hunt brothers cornered nearly a third of the overall physical market. Regulatory changes on leverage and expanded supply were implemented in response, costing the brothers nearly a billion dollars in losses and another $140 million in fees, resulting in one of the more high-profile bankruptcies in finance history books. And while speculative interest and leverage are certainly in play for this rally, we submit that the Fed's easy money policy, rising scrutiny of US debt by S&P, and reserve diversification among global central banks are fuelling silver gains. Concurrently gold also hit a fresh record high at $1,518/oz. Key risk remains this week's FOMC decision, with any hint of inflation assessment as less "transitory" threatening to derail rising silver/gold via a stronger dollar.

Highlights from the CFTC Commitment of Traders report include net short positioning in Japanese Yen extended to a 1-year high. Mexican peso also remains in high demand, hitting a net-long multi-year high for the second consecutive week. Both the euro and the aussie saw net long exposure diminish, however we should note the latest CFTC data only reflects positioning through last Tuesday - prior to Intel-infused return of risk-on flows.

New home sales for the US in March on tap for 10amET are expected to rise to 287K units from 250K. Median price remains a critical component to the US housing data as indicated ahead of the existing sales last week - February print marked a 7-year low just above the $200K mark. Last month's figure should also answer to what extent housing market activity was depressed by inclement weather. US earnings season continues with high-flyers Express Scripts, Ameriprise Financial and Netflix expected to report afterhours. Home improvement play Masco is also expected to post its Q1 quarterly results after disappointing investors on the top and bottom lines last time around.

By GG - AshrafLaidi.com Staff