Chart Of The Day: Silver Bulls Flagging

 | Nov 05, 2021 21:40

This article was written exclusively for Investing.com.

Precious metals have been shining more brightly of late, thanks partly to major central banks refusing to be more aggressive in reducing monetary support or afraid of tightening. We have seen yields fall as a result, underpinning gold and silver, as well as helping to extend the rally for major global stock indices.

With central banks out of the way, and the Fed already announcing its tapering plans earlier this week, today’s US jobs report didn’t cause too much of a headwind for the metals, with yields remaining under pressure despite the better-than-expected numbers. 

Undoubtedly, a weaker jobs figure would have benefitted the metals more, as that would have discouraged policy makers at the Fed to reduce stimulus more aggressively than the current pace of $15 billion per month in net asset purchases. But even though jobs come in slightly above expectations, I don’t think it will cause a major slide in gold or silver prices.

If precious metals were going to drop, they should have done so when the Fed announced tapering on Wednesday. Instead, they have been able to rise, suggesting the Fed’s decision was fully priced in, while inaction from the Bank of England and continued dovish rhetoric from the European Central Bank, means investors can rest assured that stimulus will not be withdrawn too quickly. 

While both precious metals could be about to break sharply higher, the ongoing positive risk appetite (as evidenced in the equity markets) suggest silver might be able to outperform gold.