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.

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"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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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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