Gold and silver are gaining significant momentum as hedge funds increase their bullish bets on the precious metals, anticipating the Federal Reserve’s upcoming easing cycle, according to a report by Kitco News.
The report cites trade data from the Commodity Futures Trading Commission (CFTC) as highlighting that speculative positioning in both metals is on the rise.
Gold, in particular, saw a surge in speculative interest, with the CFTC’s Commitments of Traders report for the week ending 17 September showing that money managers increased their gross long positions in Comex gold futures by 28,199 contracts, bringing the total to 241,844 contracts. At the same time, short positions rose by 2,299 contracts to 25,489.
This increase in bullish positions has helped sustain gold prices above $2,600 an ounce, with net longs now at 216,355 contracts, marking a new four-year high.
While some market analysts have expressed concerns that the bullish positioning in gold is becoming overextended, the precious metal remains well-supported after the Federal Reserve delivered a 50-basis point rate cut, meeting market expectations. The Fed also signalled that it expects long-term interest rates to drop to 3% by 2026.
Silver is also seeing a strong uptick in bullish interest from hedge funds. According to the CFTC data, speculative gross long positions in Comex silver futures increased by 11,608 contracts, while short positions fell by 2,190 contracts. Silver’s net length now stands at 39,619 contracts, marking a two-month high, with prices holding above $31 an ounce during the survey period.
With over 50% of silver demand tied to industrial uses though, sluggish economic activity could put downward pressure on the metal.
