Silver markets are expected to experience downward pressure due to selling activity from Commodity Trading Advisors (CTAs), according to Daniel Ghali, a macro analyst at TD Securities (TDS).
Positive Fundamental Outlook for Silver
The current price movements reflect a selling program that has reached -6% of the maximum size of algorithmic trading positions, equating to a reduction of -28% from their current holdings. Despite this, the fundamental outlook for silver remains robust. The increasing use of silver in solar technology is progressively capturing a larger share of total silver demand, with next-generation technology adoption surpassing expectations and resulting in notably higher silver loadings.
Long-Term Outlook Amidst Short-Term Pressures
While signs indicate that Chinese manufacturers are starting to conserve silver, this trend is unlikely to significantly impact silver demand growth in the upcoming year. Additionally, emerging reflationary trends should ideally be reflected in silver prices, especially since traditional industrial demand has been a primary concern over the past few months, along with risks associated with gold positioning.
Overall, while short-term selling pressures may weigh on silver, its long-term prospects remain promising due to strong demand from evolving technologies and industrial applications.
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