LONDON, March 22: Silver surged to its highest in more than 22 years on Wednesday on strong speculative buying after US regulators took a big step towards finally approving the market’s first exchange-traded fund (ETF). The fund, to be backed by physical metal, has the potential to bring fresh investment to the market and soak up supply, dealers said.

Of course you have had the good news about the silver ETF. It’s not the final approval but is pretty close to it, said John Reade, precious metals analyst at UBS Investment Bank.

If you get 50 million ounces of silver for the ETF, it will have a big impact on the market.

Spot silver touched $10.59 per ounce, its highest since September 1983, and was at $10.54/10.57 by 1039 GMT, against $10.53/10.56 late in New York on Tuesday.

Silver, used in jewellery, electronics and photography, has risen nearly 20 per cent since the start of 2006 in anticipation of the fund launch.

Dealers said the market might have about 600 million ounces of silver available for delivery, including holdings by central banks, dealers and other banks.

Gold was firmer but speculation about US interest rate rises kept it in a tight range.

Spot gold eased to $548.80/549.70 an ounce from $551.80/552.70 in the US market.

Gold has repeatedly failed to breach a key resistance at $560, making it hard for the metal to test a 25-year high of $574.60 hit in early February.—Reuters