Hedge funds have reduced their net long exposure to silver to the lowest level in over a year, signaling a sharp shift in sentiment amid rising interest rates and strengthening dollar dynamics. The move reflects growing caution in precious metals markets.
- Net long silver positions fell to 3,850 contracts, the lowest since January 2022.
- A 41% reduction in bullish exposure over six months signals heightened risk aversion.
- Silver spot price at $31.20 per ounce, down 14% from 2024 peak.
- U.S. dollar strength and Fed policy shifts are key drivers of the selloff.
- Industrial demand from solar and electronics sectors has weakened.
- Many fund managers are reallocating capital toward gold and equities.
A significant contraction in speculative bullish bets on silver has pushed net long positions to their weakest point since early 2022, according to recent data tracking open interest and positioning trends across major derivatives exchanges. This decline marks a reversal from earlier in 2023 and 2024, when silver saw increased institutional demand driven by inflation concerns and supply constraints in mining output. The reduction in silver wagers is part of a broader trend of de-risking among hedge funds, with net long exposures falling by approximately 41% over the past six months. At the current level, aggregate long positions stand at around 3,850 contracts, down from a peak of nearly 6,500 contracts observed in mid-2023. This reflects a strategic retreat from commodities perceived as less liquid or more volatile under shifting macroeconomic conditions. Market participants note that the Federal Reserve’s continued hawkish posture, coupled with a stronger U.S. dollar index that has appreciated by over 9% year-to-date, has weighed heavily on non-yielding assets like silver. Additionally, declining industrial demand from sectors such as solar panel manufacturing and electronics has contributed to softer fundamentals, further discouraging speculative inflows. The shift in positioning has begun to influence spot prices, with silver trading near $31.20 per ounce—a 14% drop from its 2024 high. Investors are now re-evaluating silver's role in diversified portfolios, with many reallocating capital toward gold or equities expected to benefit from higher-for-longer rate environments.