Strategists at TD Securities analyze the outlook of silver (XAG/USD). They note that a consolidation lower in the USD has sent participants rushing for the exits.

Short positioning has grown to its highest levels since 2019

“With money managers short positioning in silver having grown to its highest levels since 2019, a consolidation lower in the USD has sent participants rushing for the exits. However, the coincident rally in gold prices has been more limited, which suggests little has changed with respect to the investment appetite for precious metals.”

“With 54% of silver's demand tied to fabrication, silver remains highly sensitive to our deteriorating gauge of commodity demand.” 

“We continue to expect that while rates markets appear to be nearing a fair pricing for Fed funds, precious metals' price action is still not consistent with their historical performance when hiking cycles enter into a restrictive rates regime.”