Silver prices are on the rise, but TDS senior commodity strategist Daniel Ghali cautions that the metal may face downward pressure from Commodity Trading Advisor (CTA) selling activity in the coming week.
Strong Fundamentals, Yet Cautious Outlook
“Our simulations of future prices continue to indicate negative asymmetries in positioning risks over the next week, with a significant uptick needed to prevent CTAs from moving to sell,” Ghali notes.
He explains that uptrend signals for silver are weakening. Unlike gold, Shanghai traders are increasing their short positions after substantial long liquidations, significantly reducing the net positions of top traders.
Despite this, Ghali highlights that silver’s fundamentals remain strong. Solar capacity continues to exceed expectations, and the industrial demand outlook may be overly pessimistic. However, the potential for a significant sentiment reversal driving prices higher is limited by the recent increase in the free float and a pessimistic outlook for algorithmic trading flows.
