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Silver Shines so far in 2017 but record positioning could mean correction

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NEW YORK (Scrap Register): Silver has shined so far in 2017 but its outlook could be dulled by record speculative positioning in the futures market, said Barclays in a research note.

Traders monitor weekly positioning data, released on Friday afternoons by the Commodity Futures Trading Commission, to gauge the general mood of speculators, although excessively high or low numbers are viewed by many as signs of overbought or oversold markets that may be due for price corrections.

“Precious metals were the best-performing commodity class during Q1, and silver and palladium increased more than the rest,” the British bank added. “Year-to-date, silver has returned 15%, assisted by a weaker dollar and weaker rates.”

Although silver may have some room to run, managed-money positioning has hit record levels, and this combined with price action, suggests that upside price momentum is stalling and silver could correct lower.

Barclays believes silver is likely to move lower from here, given the strength of the rally, the metal’s failure at key resistance levels of $18.40-18.60, and stretched positioning.

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