Gold saw speculative longs stay flat while short positions grew 8%.
George Gero, senior vice president at RBC Capital Markets, believes that silver's rally is not only short covering but also repositioning by traders ahead of options expiration next week. There are also "a lot of momentum traders after highs." Gold prices have also been subject to this rebalancing.
The medium term snag for gold and silver, however, comes in June when the Federal Reserve's quantitative easing program comes to an end. Next week the Fed will meet and no changes to interest rates are expected, but the market will be listening for hints on whether monetary policy will be tighter or loser in the future.
Steve Ayer, managing director and partner at HighTower's Strata Wealth Management, believes that the Fed will have no choice but to continue a lose money policy by either QE3 or by reinvesting its profits from QE2."
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