Retail investors are in the driver’s seat in gold and silver, according to CME

Adam

Summary:

Retail traders drive surging gold and silver volumes at CME, with micro contracts booming. Silver hits record highs amid strong demand, tight supply, and expectations it could catch up to gold.

Retail demand continues to dominate the precious metals market, according to trade data from the CME Group.

On Tuesday, the world's leading derivatives marketplace said that trading volume last month was the second-highest on record. The exchange saw an average daily volume (ADV) of 33.1 million contracts in November, an increase of 10% year-over-year.

Specifically in the metals sector, the CME said total average daily volume increased 52% last month, driven by smaller gold and silver contracts.

According to the monthly data, Micro Gold futures — one-tenth the size of a regular 100-ounce contract — saw ADV of 476,000 contracts, a 235% increase from last year.

Not surprisingly, given the price action, silver attracted significant attention last month. Silver futures saw ADV of 108,000 contracts, up 22% from November 2024. At the same time, micro silver futures — one-fifth the size of the 5,000-ounce silver futures — saw average volume of 75,000 contracts, up 238% from last year.

Analysts have said that retail investment demand has been the critical factor behind the recent surge in silver. Last month, silver futures rallied 18.6%, marking their best monthly performance since July 2020.

Most of silver’s gains came in the final week of November as prices rallied 14.5%, breaking above $55 an ounce for the first time on record. Silver’s breakout rally also came after trading on the CME was halted for 10 hours overnight following a technical disruption. Trading resumed Friday morning at the start the North America session.

Silver prices have continued their parabolic rally into December, with prices last trading at $59.275 an ounce, up 0.23% on the day. Meanwhile, silver prices are up more than 100% so far this year.

Although silver prices could see renewed volatility at their new record highs, analysts note that the precious metal’s uptrend remains well supported as robust demand continues to outweigh dwindling supply.

Chris Mancini, co-Portfolio Manager of GOLDX at Gabelli Funds, said in a note Tuesday that silver is still an attractive value play compared to gold.

“The long term ratio of gold to silver is around 68. That means the price of gold, per ounce, divided by the price of silver per ounce, is long term around 68. Today, it stands around 74. So, I think that there's a chance for silver to really catch up and and trade at that long term average of around 68 — that would mean the price of silver would go from $58 today to around $65 per ounce,” he said.

Source: Kitco

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