Silver jumps 3% to 10-month high as hedge funds buy in

www.marketwatch.com

By VictorReklaitis

Silver futures climbed to their highest level in more than 10 months on Tuesday, as gold futures also gained.

Silver for May SIK6, +4.81%  delivery advanced 2.6%, or 43 cents, to $16.68 an ounce, trading at levels last reached in early June. June gold GCM6, +1.73%  tacked on 0.7%, or $8.70, to $1,243.70 an ounce.

Hedge funds boosted their bets on silver last week, pushing the overall market into a record net long position, according to a Mining.com report citing CFTC data. That came as silver gained 6% last week.

Analysts also attributed silver’s jump in part to strong buying in China and a weakening dollar.

A drop by the buck can boost dollar-denominated commodities, making them cheaper for holders of other currencies. The ICE U.S. Dollar Index DXY, -0.46% was down 0.2% on Tuesday.

Silver’s chart shows the commodity has found a bottom, meaning buyers have stepped in and established a floor, said a Commodity Trade Mantra report.
Silver and gold — often viewed as safety plays — advanced Tuesday even as stocks worldwide and other riskier assets advanced.

“Despite all the apparent risk-on sentiment, silver prices are surging with gold prices also taking upside cues,” said Brenda Kelly, London Capital Group’s head of analysts, in a note.

“Silver’s greater industrial use means it is more sensitive to the industrial cycle and potentially less of a haven than gold,” she added. Silver “does look cheap relative to gold in some respects,” even as the price ratio for gold to silver is now at a 2016 low, Kelly said.

Silver is up about 21% this year, outperforming gold, oil CLK6, +1.46%  and the S&P 500 SPX, +0.23% though not lean hogs LHM6, +0.96%