Silver Posts Longest Slump in 8 Months as Citigroup Flags Risks

  • Money managers boosted net-long silver positions to record
  • Prices seen dropping in second half of 2016, Citigroup says

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Silver fell for a fourth straight session, the longest slump in more than eight months, as Citigroup Inc. said investor demand for the metal may sputter in the second half of the year.

While funds have boosted their net-long positions on silver futures and options to a record as prices surged this year, “performance anxiety and profit-taking ahead of the summer holiday season may deter money managers from adding fresh longs,” Citigroup said in a report Tuesday. Limited gains in gold may also weigh on silver, the bank said.

The white metal has climbed 45 percent this year through Monday, outpacing gold’s 26 percent advance, to deliver the best return of 22 raw materials on the Bloomberg Commodity Index. Low interest rates and mounting concerns about slowing global economic growth have boosted demand for precious metals a a store of value this year.

“The year-to-date silver price rally already appears to be stalling,” Citigroup analysts including Heath Jansen and David Wilson, wrote in the report. “We caution against any further silver price optimism in the second half of 2016.”

Silver futures for September delivery slipped 0.3 percent to settle at $20.007 an ounce at 1:42 p.m. on the Comex in New York. This year’s rally meant that an ounce of gold in the spot market buys 66.85 ounces of silver, compared with a seven-year high of 83.84 ounces in February.

Gold futures for August delivery rose 0.2 percent to $1,332.30 an ounce on the Comex.

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