Silver broke the $28 level during the trading session on Monday breaking a resistance barrier. The grey metal is finally receiving long overdue attention.
Kitco: According to analysts looking at the latest trade data, the gold market appears to be struggling to find momentum as hedge funds liquidating their long positions and adding to their bullish bets. The Commodity Future Trading Commission (CFTC) disaggregated Commitments of Traders report for the week ending Aug. 25 showed money managers reduced their speculative gross long positions in Comex gold futures by 5,961 contracts to 145,055. At the same time, short positions rose by 2,628 contracts to 58,206. During the survey period, the long liquidation helped to push gold prices to a one-week low. Gold's net length now stands at 86,849 contracts, down 9% from the previous week. "A further attempt to regain or indeed rise above the $2,000 mark is likely to be no easy undertaking, as there is insufficient investor interest at present," said analysts at Commerzbank. They also noted that speculative interest in gold is at its lowest level since May 2019. Ole Hansen, head of commodity strategy at Saxo Bank, said that a recovery in the U.S. dollar, after falling to a two-year low and higher bond yields prompted speculative investors out of gold last week.
Saxo: Overall we maintain a bullish outlook for gold and silver with loose monetary and fiscal policies around the world supporting not only gold and silver but potentially also other mined commodities. Real rates - as highlighted earlier - remains by far the biggest driver for gold and the potential introduction of yield-curve control combined with the risk of rising inflation – as the U.S. authorities are looking to overstimulate the economy - should see those rates remain at record low levels, thereby supporting demand for metals. An increasingly fraught U.S. elections season combined with current U.S. – China tensions are likely to add another layer of support through safe-haven demand. The potential for even lower real rates should also support a continued weakness of the dollar, thereby creating the trifecta of drivers that should support investments in precious metals. Silver’s roller-coaster year from $18.5/oz in February to $12/oz in March and now $28/oz highlights the often extreme volatility that this semi-precious metal can produce. Silver’s strong surge has apart from the strong momentum attracting new investors, been driven by a combination of its relative cheapness to gold – now removed – and the tailwind coming from rising industrial demand.
