Silver’s price action surged by 3.5% during the last session, driven by several consecutive buying programs from Commodity Trading Advisors (CTAs), who increased their net length by 70%. Despite the strength of the breakout, it’s only about 13% of the maximum size CTAs can hold. The repeated market whipsaws have reduced the effectiveness of trend signals, which makes the current strength less certain, according to Daniel Ghali, Senior Commodity Strategist at TDS.
The key takeaway for silver traders is that this recent upward momentum is expected to attract discretionary traders into the market. With gold reaching new all-time highs and the XAU/XAG ratio remaining elevated, silver is drawing increasing attention. Ghali notes that the broad commodity complex continues to show resilience in demand, with no signs of weakness emerging from real-time commodity demand expectations.
This environment has historically been associated with silver’s relative value strengthening against gold. As such, CTAs are unlikely to sell silver unless there’s a significant downturn in prices. This indicates a lower risk for the breakout to fail, suggesting silver could maintain its bullish trend in the near future.
The ongoing pressure on Exchange for Physical (EFP) markets, even if tariffs aren’t introduced this weekend, is expected to tighten London forwards and drain inventories, potentially testing market structure. With lease rates still elevated, the likelihood of outright spot purchases continues to grow. This liquidity challenge could have a non-linear effect on silver’s flat prices, amplifying any further upward movements.
Also Read: Silver Price Dips 2.29% Below $31.50 Amid Dollar Rally- Key Support At $30.84 In Focus For Traders
For silver investors, the combination of strong price momentum, resilient demand signals, and constrained liquidity presents a potentially lucrative outlook. As the market remains in a bullish phase, silver’s breakout could be the beginning of a more sustained rally, particularly if these key factors continue to align.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of FXRift.com . Before making any investment decisions, you should always conduct your own research. FX RIFT is not responsible for any financial losses.
