CPM: Silver Could Break Out of Its Range Within Two Months as Gold Continues to Rise

Jeffrey Christian of CPM Group stated that gold futures are testing the $4,100 level, while silver has repeatedly tested the $60 level, with both metals remaining in broad ranges marked by sharp declines and strong recoveries. Christian believes silver could break out of its range to the upside within two to three months, whereas pessimistic views point to a potential drop to $50 or lower.

The group's report expects gold and silver to rise over the coming months despite near-term downside pressure, driven by strong physical demand and a rise in net long positions in gold futures among traders on the COMEX exchange. Christian stressed the need to distinguish between investment demand and fabrication demand when reading data for both metals.

The group estimated that gold exchange-traded funds added around 3 million ounces in August amid rising prices, and about 2 million ounces in September as prices pulled back. It pointed to central bank purchases, led by China and Poland, as a key pillar supporting prices alongside investor purchases.

This analysis comes at a time of escalating bond market fears, growing global debt, ongoing conflicts involving Iran and Ukraine, trade tensions, and slowing growth ahead of the US congressional elections. For regional investors, these factors remain key drivers of demand for gold as a hedge against market and currency volatility.

What do these terms mean?

Futures contracts: An agreement to buy or sell a commodity at a price determined today, with execution taking place at a later date, used by traders for hedging or speculation.

Gold Exchange-Traded Funds (ETFs): Funds traded on exchanges like stocks that track the price of gold, allowing investors to buy shares instead of holding physical metal.

Net long positions: The difference between the number of open buy contracts and sell contracts held by traders; an increase indicates market optimism toward the metal.