Quarterly Outlook
Macro Outlook: The US rate cut cycle has begun
Peter Garnry
Chief Investment Strategist
Head of Commodity Strategy
Summary: Although silver is currently down by 13% on the year, signs of strength are emerging and it may be readying for a breakout to the upside.
While speculators or hedge funds according to the weekly Commitments of Traders report cut their net-short in gold by 97% to neutral in the week to December 4 they maintained a short position in silver of 22,177 lots, close to half of the record short seen back in September. For the breakout in silver to materialise it needs the continued support from gold and on that basis the $1,230/oz to $1,240/oz area is now in focus. Within this range hedge funds recently bought 50k lots split between 30k lots from short-covering and 20k lots from fresh longs. Any renewed weakness below will challenge these decisions and give us a clue about the current strength in the market.