Demand from individual investors continues to dominate the precious metals market, according to trading data from CME Group.
On Tuesday, the world's leading derivatives exchange said that trading volume last month reached the second highest in history. The exchange recorded an average daily trading volume (ADV) of 33.1 million contracts in November, up 10% over the same period last year.
In the metals segment, CME said total ADV increased by 52% last month, mainly thanks to small-sized gold and silver contracts.
According to monthly data, the Micro Gold contract - equal to only one-ten of the standard 100-ounce gold contract - recorded ADV 476,000 contracts, up 235% over the same period last year.
It is no surprise that silver attracted great attention last month. Silver futures have ADV 108,000 contracts, up 22% compared to November 2024. Meanwhile, the micro silver contract - equal to a five-digit portion of the standard 5,000-ounce silver contract - has an average volume of 75,000 contracts, up 238% from the previous year.
Analysts say that investment demand from individual investors is an important factor driving the recent increase in silver. Last month, silver futures rose 18.6%, recording their strongest increase in the month since July 2020.
The bulk of the silver rally came in the final week of November, when prices jumped 14.5%, surpassing the $55/ounce mark for the first time in history. This sudden increase comes after transactions on CME were suspended for 10 hours overnight due to technical problems. Transactions resumed on Friday morning, starting the North American session.
Silver prices continued to increase strongly in December, currently trading at 69.275 USD/ounce, up 0.23% on the day. Since the beginning of the year, world silver prices have increased by more than 100%. Meanwhile, world gold also increased by about 60.79%.
Although silver prices may experience fluctuations at record highs, analysts said the uptrend is still firmly supported as strong demand far exceeds the shrinking supply.
Chris Mancini, co-manager of the GOLDX portfolio at Gabelli Funds, said in a statement on Tuesday that silver is still an attractive choice in value against gold.
The long-term ratio between gold and silver is about 68. That means gold prices divided by silver prices in the average long-term ounce is about 68. Currently, this rate is about 74. So I think silver has a chance to catch up and trade near the long-term average of 68 which means silver prices will go from $58 today to around $65 an ounce, he said.
