As is often the case with Federal Reserve meetings, this week’s Fed meeting was expected to have some impact on precious metals and the related exchange traded funds, including the iShares Silver Trust (NYSEArca: SLV) and ETFS Physical Silver Shares (NYSEArca: SIVR).
What potentially stands in the way of upside for silver ETFs is not that the Fed decided to raise rates this month. That was widely expected heading into this meeting. The issue for precious metals ETFs is the specter of a quicker pace of rate hikes in 2018. That could buoy the dollar and weigh dollar-denominated commodities.
“Per the latest Commitment of Traders (CoT) data, large speculators reduced their net long exposure on silver by nearly 28,000 contracts last week — the biggest decline ever recorded. There have been just seven weekly declines of more than 20,000 positions ever, according to Schaeffer’s Quantitative Analyst Chris Prybal. The two-week drop of 36,150 contracts is the second-largest ever, exceeded only by a signal in May 2017,” reports Schaeffer’s Investment Research.
SLV and SIVR, which are backed by physical silver bullion, have traded slightly lower since the start of the fourth quarter and year-to-date performances for the silver ETFs are well behind competing gold funds.