Gold could be followed by silver for new records

On Thursday, the price of gold rose to a new record high of $2,685 per troy ounce. Speculative market positioning data showed that speculative net long positions in gold rose to the highest level since February 2020 in the last reporting week. It wouldn’t be surprising if more investors have jumped on the bandwagon since then. However, this also increases the risk of a correction, notes Commerzbank commodity analyst Carsten Fritsch.

Gold climbs to new records, followed by Silver

“It’s hard to explain the rise in prices over the past few days with rate cut expectations as they haven’t risen further and were even cut somewhat yesterday. This is probably why the price has meanwhile fallen to record lows. The price could also rise as investors buy gold in anticipation of further price increases. In this context, we talked a few months ago about a rational bubble.”

“The speculative market positioning data to be released by the CFTC this evening after the close of trading may provide some insight into this. Speculative net long gold positions rose to their highest level since February 2020 in the last reporting week. It wouldn’t be surprising if more investors have jumped on the bandwagon since then. However, this also increases the risk of a correction if these investors were to exit again.”

“Silver has recently rallied behind gold. Yesterday, it hit $32.7 a troy ounce, the highest level since December 2012. The gold/silver ratio then fell to 82, the lowest level since mid-July. Silver is likely to have benefited further from China’s extensive stimulus measures, which were announced this week and have also driven base metal prices higher.”