Gold and silver are dominated by the dollar but the precious metals are ready for a short squeeze

Editor’s Note: With so much market volatility out there, stay tuned for the daily news! Immerse yourself in minutes with our quick summary of today’s news and must-read expert opinions. Register here!

(Kitco News) – The US dollar continues to dominate He went And the silver Last week’s 20-year high prompted hedge funds to liquidate their bullish bets and increase their exposure to downside exposure.

However, analysts warn that profit-taking in the US dollar could put pressure on the short sellers of precious metals, which appears to be happening in the silver market where prices are up 6% at the start of the new trading week, testing resistance at $20 an ounce.

All eyes are currently on silver as the precious metal is witnessing its best daily gain in a year. The rise in silver comes as hedge funds pushed their bearish bets to a three-year high.

Commodities said: “The King Dollar reversal is spurring a fierce short squeeze for silver. After all, with silver short positions in silver growing to the highest levels since 2019, a bearish USD consolidation prompted participants to rush out.” Analysts at TD Securities, in a report on Monday.

The CFTC’s Detailed Commitment of Traders Report for the week ending September 6 showed that money managers increased their total speculative long positions in Comex silver futures by 2,718 contracts to 33,857 contracts. Meanwhile, short positions rose at a brisk pace by 6,430 contracts to reach 58,600.

Silver net short positions now stand at 24,743 contracts, up more than 17% over the previous week. This is the third week in a row that the silver market has seen an increase in bearish bets.

During the survey period, silver prices fell to their lowest level in more than two years at $17.40 an ounce.

“Silver bears have the overall technical advantage in the near term. However, the bulls have momentum on their part to signal that the bottom of the market is in place,” said Jim Wyckoff, chief technical analyst at Kitco.com.

Although silver is currently benefiting from a short squeeze, some analysts do not know if the rally will be sustainable. Nicky Shiels, head of metals strategy at MKS, said silver has room to rise in the near term.

“In the medium term, as long as the US dollar remains in a structural uptrend, silver’s rallies will be short-lived, unless fundamentals are recognized and remain strong,” she said.

Gold is also benefiting from a weaker US dollar but is not seeing the same price action as silver, even as bearish hedge funds continue to dominate the market.

The detailed report showed that total speculative fund-managed long positions in Comex gold futures declined by 5,919 contracts to 85,842. Meanwhile, short positions rose by 12,831 contracts to 92,804 contracts.

After a month of holding out in the bullish zone, He went The market again turned net short of 6,692 contracts.



During the survey period, He went Prices fell to support $1,700 an ounce. However, since then, the market has recovered on the back of a weak US dollar. Investors are waiting to see if prices can return to $1,750 an ounce.

While He went There is scope for a move higher in the near term, and many analysts don’t expect to see any sustained breakout anytime soon.

Currency analysts said the US dollar remains the most attractive global currency as the Federal Reserve maintains an aggressive stance on monetary policy.

I remain bullish on the US dollar because the Fed is better positioned to instil confidence in its currency than the Bank of England or the European Central Bank,” Kitco News.

Currency analysts at Brown Brothers Harriman remain bullish on the US dollar and see the current price action as a short-term correction.

“From our point of view, nothing fundamental has changed and the global backdrop remains in favor of the dollar and US assets in general,” the analysts said.

Some profit taking in the King Dollar is also benefiting the base metals sector as hedge funds maintain a slightly bearish stance on copper.

A detailed copper report showed that total speculative money-managed long positions in Comex’s high-quality copper futures contract decreased by 1,074 contracts to 36,543. Meanwhile, short positions rose by 1,392 contracts to 47,676.

The situation in the copper market remains bearish with net shorts relatively unchanged at 11,133 contracts. Speculative positions in copper affected prices, which managed to maintain the support at $6.40 per pound.

The global economic outlook remains gloomy and recession fears continue to grow, which remains a risk to copper; However, Darin Newsom, head of Darin Newsom Analysis, said the market is seeing some strong technical bullish momentum.

“We may not know the real reasons behind the copper rally, but what a new bullish trend is building on buying interest from both traders. The response from non-commercial interests has been slow, as seen in the recent Commitments of Traders Commitments Reports from the CFTC (Legacy/futures only, the only ones that matter), as last week showed an increase in the group’s net futures position. This opens the door to a stronger rally in futures when this group starts to cover those short futures contracts.” Note Friday.

Disclaimer: The opinions expressed in this article are those of the author and may not reflect the views of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; However, Kitco Metals Inc. cannot. Nor does the author guarantee this accuracy. This article is for informational purposes only. It is not a solicitation to conduct any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. does not accept The author of this article will be liable for losses and/or damages arising from the use of this publication.