Silver is gaining popularity among hedge funds as they try to protect themselves from inflation, which is increasing because many different types of goods are becoming more expensive. This conclusion comes from experts who studied the newest information from the Commodity Futures Trading Commission.
Silver is getting a lot of attention lately because its price is going up along with gold, and there’s also renewed interest in copper. Experts say that because silver is used in industry and as a form of money, it’s in a great position to become more valuable.
According to the latest report from the Commodity Futures Trading Commission, for the week ending May 14, hedge funds reduced their bets on the future price of silver by selling some of their holdings. They sold 5,314 contracts, but they also reduced the number of contracts they were betting against, known as short positions, by 188 contracts.
The demand for silver has gone up again, making it the highest it’s been in a month. Investors are holding onto more silver contracts, totaling 39,696. During this time, silver prices hit a tough barrier at $29 an ounce.
Experts think that investors are still feeling positive about silver’s future, especially since it broke through a tough barrier at $30 an ounce. Silver is now at its highest price in 11 years, selling for $32.52 an ounce, which is a 4% increase from the previous day.
The experts at TD Securities, who study commodities, mentioned that conditions leading to silver’s recent surge have been building up for some time.
They said on Friday that there’s not enough silver in China, which might mean they’ll need to import more soon. Plus, if silver keeps going up past $30 an ounce, more people might start buying silver through exchange-traded funds (ETFs), which could lead to a big rush to buy silver, especially with the recent popularity of meme stocks influencing silver markets.
However, some experts warn that silver can be very unpredictable, so investors should be cautious. They also point out that even though the market is doing well, it might be a bit too high at the moment.”
David Scutt, who works as a Market Analyst at Forex.com, pointed out that besides the impressive rise, silver is showing signs of being too popular for its own good. He mentioned that its Relative Strength Index (RSI) on a daily basis is at a very high level of 79.74, which is quite rare. Looking back to 2015, there were only four times when the RSI went this high, and three of those times, it marked a peak in the silver’s value.
Analysts also noticed that people betting on silver are at a relatively high level, especially considering the past four years where reaching 50,000 in betting has been a big deal.
Even though silver is getting a lot of attention, gold is still holding steady in terms of people betting on its value.
According to the latest report, the number of contracts people are betting on the future price of gold went down by 7,088 to 171,868. At the same time, the number of contracts people were betting against, called short positions, went up by 2,752 to 41,433.
The overall betting situation for gold hasn’t changed much in the last month, even though its price has been around $2,350 an ounce.
But recently, gold prices have gone up a lot, crossing $2,400 an ounce. Some analysts think that since gold and silver are both doing well, they might keep getting more valuable.
Also, analysts point out that because the economy isn’t doing as well, there’s a chance the Federal Reserve might lower interest rates twice this year.
The analysts at TD Securities said that because recent economic news hasn’t been good, more people are betting on gold. However, they think that before people start betting too much, they’ll wait to see if the bad economic news keeps coming. But overall, they think gold could go up even more because people who trade precious metals are ready to invest more, especially if the economy keeps struggling.”
