Silver price (XAGUSD) is bouncing back, a few days after it recorded its sharpest decline in months. The price is up by more than 3.5% today, making it the best-performing metal. Gold price is up by more than 0.92% while palladium and platinum prices are up by 1.50% and 2.50%, respectively. Other base metals like copper, aluminium, and zinc are also in the green.
Silver price is rising even after data from the Commodities and Futures Trading Commission (CFTC) showed that hedge funds are cutting their bullish calls. The net speculative positioning dropped to 23.6K in the previous week after rising to 29.9k in the other week. The speculative positioning has been in a slow decline after peaking at 43.9k in early July. Although the numbers in the CoT report focus on the smaller futures market, it is a good signal of where the market is going.
At the same time, silver price is possibly rising today because hedge funds have gotten bearish on the US dollar for the first time in two years. The net futures and forward positions held by speculators dropped to minus 7,881 contracts, according to the CoT report. This is an important metric because of the inverse relationship that exists between the US dollar and silver price. As such, analysts at Standard Chartered expect that the upward trend remains. Suki Cooper, the head of precious metals at the bank said:
“Barring further profit-taking, we think the longer-term uptrend is intact given U.S. dollar weakness and the scale of stimulus and as we expect interest rates to remain low or negative. Price dips are likely to be viewed as buying opportunities.”
Silver price forecast
The daily chart below shows that silver price has been in an upward trend since bottoming at $11 in March. The price reached a high of $29.88 on August 7. The price dropped to a low of $23.32 on Wednesday last week and is now trying to pare back these losses.
It is above the 50-day and 100-day exponential moving averages and the ascending trend line that is shown in black. Therefore, the pair is likely continue rising as bulls attempt to test the previous high of $22.88.
On the flip side, a move below Wednesday’s low of $23.32 will send a signal that there are sellers who will be ready to push the price lower.