Silver breakout in the previous session fueled strong price action (+3.5% close/close in SIH5) associated with multiple consecutive CTA (Call To Action) buying events that ultimately increased their net long to 70%, equivalent to +13% of the CTA’s maximum size, as repeated whipsaws diminished the strength of the trend signal.
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“Whether tariffs are announced this weekend or not, we expect continued pressure on the EFPs, which will ultimately continue to tighten London forwards and drain inventories towards levels that can challenge the market’s structure. With lease rates remaining elevated, the likelihood of outright spot purchases may be rising by the day. With liquidity critically challenged, such purchases would have a non-linear impact on flat prices.”
we expect this strength in prices to attract subsequent discretionary trader interest, given this cohort remained nearly flat as of last week, with gold printing new all-time highs and the Gold ratio remaining at elevated levels. Interestingly, under the hood, the cross-section of the broad commodity complex continues to point to a resilient demand environment, with our real-time gauge of commodity demand expectations still not showing any notable sign of weakness.”
“Historically, this has been associated with a strengthening in the relative value in silver to gold. Ultimately, CTAs (call to action) will not sell silver in any scenario for prices other than a big downtape over the coming week, suggesting limited scope for the breakout to fail.”
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