Jump to content

Silver expected to turn lower as yields highlight impending monetary tightening


MongiIG

Recommended Posts

Silver expected to turn lower as yields highlight impending monetary tightening

Silver at risk of another bearish turn as rising inflation and yields point towards likely monetary tightening phase.

bg_silver.jpgSource: Bloomberg
 
 Joshua Mahony | Senior Market Analyst, London | Publication date: Monday 11 October 2021 

Precious metals at risk as yields rise

Gold and silver have been under pressure of late, with the recent rise in inflation driving expectations of a tightening phase from the likes of the Federal Reserve (Fed) and Bank of England (BoE).

Yields typically rise when economies improve and central banks raise rates, and thus it will be important to watch yields as a determinant of where precious metals go from here. That inverse correlation means that higher yields should bring weakness across precious metals.

Notably, the bull story for precious metals appears to gain prominence when central banks embark on a protracted period of easing. While we remain within that phase, the inflationary pressures tell a story of growing pressures on central banks to act. The chart below highlights how years of falling 10-year treasury yields (inverted) have given the basis for silver upside over the years.

Friday’s jobs report did provide some food for thought over whether the Fed will continue to push forth with plans to taper in November. Nonetheless, with a sharp decline in unemployment and wages continuing to signal a strong jobs market, there is a good chance Jerome Powell will look beyond the disappointing payrolls figure.

Silver_vs_10y_yields.pngSource: TradingView

 

The daily silver chart highlights how price has been consolidating over much of last week, with Friday’s jobs report providing a spike into the $23.14 swing-high.

The subsequent pullback has taken us back into the recent consolidation zone, which is likely to soon resolve with another turn towards the downside.

A rise through the $24.87 would be required to bring about a wider reversal of the bearish trend in place over the course of the past four months.

XAGUSD-Daily111021.pngSource: ProRealTime

 

The four-hour chart highlights how we have been grinding higher over the course of October thus far. A push up through the $23.14 level would bring about expectations of a more protracted retracement drawn from the $24.87 level.

Nonetheless, with the intraday pattern of higher lows in place, a break below the $22.21 level would bring about a fresh bearish signal for silver.

XAGUSD-4-hours111021.pngSource: ProRealTime
Link to comment

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • General Statistics

    • Total Topics
      23,639
    • Total Posts
      97,060
    • Total Members
      44,198
    • Most Online
      7,522
      10/06/21 10:53

    Newest Member
    iambobg
    Joined 06/12/23 20:28
  • Posts

    • SP500, NASDAQ, DAX 40, FTSE 100, ASX200. Elliott Wave Insights & Strategies  Summary:  US Indices Wave 2 retracement in progress and we will look to buy the low of wave 2 in due course. The SP500, Nasdaq 100, Russell 200 and the DAX 40 have this pattern. The FTSE 100 and the ASX 200 have different patterns, however these markets will follow the same intraday moments as the US Indices within reason and will also look to build long positions in the same timing of the US Indices and ETFs. Stocks: Two types of patterns occurring in these stocks. The stocks that have dropped a lot are still in their b) wave rally and will continue into the next session. Then there are the AAPL's that have made a new high. The main point is there are no decent trends occurring in the next session. Video Chapters 00:00 SP 500 (SPX)  10:56 NASDAQ (NDX) 17:27 Russell 2000 (RUT) 18:55 DAX 40 (DAX) 21:55 FTSE 100 UKX (UK100) 27:25 ASX 200 (XJO) 41:24 End Analyst Peter Mathers TradingLounge™ Australian Financial Services Licence - AFSL 317817 Source: tradinglounge com   Access Trial #sp500 #nasdaq100   
    • I hold a small amount of CETUS on Kucoin. I aped in cos of its low mcap, solid fundamentals and ramped features. I may consider depositing some of it on Bitget to share from the reward. But first, i will look in to the requirements and all that. 
×
×
  • Create New...
us