Why traders are betting on a big bounce for the metals

The metals are getting more precious.

Gold and silver hit multimonth highs Thursday, as industrial metal copper rose to the highest level since the beginning of the year. This as the dollar continued to lose value against other major currencies.

Notably, it is a move that is strongly counter to the trend seen over the past few years, whereby metals prices have fallen mightily as the dollar has soared.

"We're seeing a massive short-covering rally right now, that's all it is," commented David Seaburg, head of equity sales trading at Cowen and Co., in a Thursday "Trading Nation" interview.

Read MoreThe surprising new case for gold

"You're going to have an opportunity here, maybe for the next month or two, to make some money here near term on the upside" for metals, and to the downside for the dollar.

Still, Seaburg warned that given the macroeconomic environment, "it is a structural short still; you lay them back out, they're going to go a lot lower."

However, Larry McDonald of Societe Generale sees the same trade as potentially having more room to run.

It is because the market is starting to price in less tightening from the Federal Reserve that "you're seeing a major reversal in gold miners and commodities," McDonald said Thursday on "Trading Nation." This because the dollar's rise has largely been driven by expectations the Fed would raise rates even as other central banks' policies were still in stimulus mode.

"We're probably in the mid-to-early innings of this game right now," the macro strategist said.

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"Power Lunch" Co-Anchor




Contributors

TradingAnalysis.com founder

Senior Director, Société Générale

Managing Director, Head of Technical Analysis, Evercore ISI

David Seaburg

Managing Director Head of Equity Sales Trading, Cowen and Company