After coming under pressure on Friday and dipping to 8-week lows, silver prices gained some respite on Monday with a retreat in US bond yields helping to cushion the risk of further short-term selling.
Following hawkish Fed comments on Friday, notably from vice-chair Fischer, the dollar continued to gain ground after the European close on Friday with EUR/USD dipping to lows just below the 1.1200 level as US bond yields also rose with the dollar’s trade-weighted index at a two-week high.
Silver was subjected to further selling with lows below $18.50 as gold reversed earlier gains.
The latest COT data recorded a further decline in long non-commercial silver positions in the latest week to just over 82,000 contracts from near 85,000 the previous week and the lowest reading since late June. The small shift could lessen the risk of aggressive position adjustment to some extent, although the number of long positions remains very high by historic standards.
Silver prices were also able to hold just above the $18.50 level at the Asian open on Monday, which lessened the immediate threat of further selling.
Trading conditions were subdued on Monday with UK markets closed for a holiday. Gold prices were able to resist further selling, which helped cushion precious metals as a whole.
US personal income and spending data was in line with expectations, while the monthly core PCE price index was also in line with expectations at 0.1%. The annual gain was marginally higher than expected at 1.6%, unchanged from the previous month, with very little market reaction.
After falling sharply on Friday there was a reversal in Treasury futures with a solid rally on the day helped by gains in German bunds. The US benchmark 10-year yield declined to just below the 1.60% level with lower rates discouraging silver selling to some extent.
The dollar was able to make only limited further headway against the Euro and yen with EUR/USD at lows around 1.1160 before a recovery to 1.1175 as USD/JPY stalled below 102.50.
Overall, silver prices moved gradually higher with gains to just above $18.80 late in the European session as gold also edged slightly higher on the day.
Trends in the dollar and bond yields will continue to be watched closely in the short term ahead of key US employment releases with the ADP data on Wednesday and employment data on Friday.
Courtesy: Tim Clayton
Please check back for new articles and updates at Commoditytrademantra.com
For More details on Trade & High Accuracy Trading Tips and ideas - Subscribe to our Trade Advisory Plans. : Moneyline