Silver Prices Underpinned by Lower US Bond Yields

A generally weaker dollar on Tuesday and rally in bond prices following slightly lower than expected core US inflation data helped underpin silver prices on the day with no significant selling pressure.

Silver prices edged higher during the US session on Monday and there were more significant gains in early Asia on Tuesday as the dollar edged lower with wider gains in industrial commodity prices providing net support.

Another bout of buying support pushed prices to the $17.70 per ounce area before a gradual drift lower in Europe as the US currency was able to resist further selling pressure. A key feature was little in the way of selling pressure.

The headline September US CPI data met consensus forecasts with a 0.3% increase as energy prices strengthened on the month. This was the highest reading for five months and the annual increase rose to 1.5%, which was the strongest increase since October 2014.

The core increases was below expectations with a 0.1% monthly increase, which held the annual increase to 2.2%.

The dollar edged lower in an immediate reaction to the data and US Treasuries rallied, but there was a quick reversal in direction as the dollar gained fresh support. After a brief spike to $17.70, there was a fresh price retreat in choppy trading conditions.

Overall, there was no significant shift in US monetary policy expectations with the Fed likely to sanction only a very slow pace of interest rate increases.

EUR/USD dipped back below the 1.1000 level, although the dollar overall struggled to gain much traction with USD/JPY below 104.00.

The October NAHB home-building index was in line with expectations at 63 from 65 previously and US Treasuries gained some fresh support towards the European close.

With gold prices holding relatively steady, there was no significant selling pressure on silver. A gradual decline in US yields allowed silver to find support near $17.50 with another rally late in the European session.

US economic data releases will continue to be monitored closely, although the overall impact is liable to be limited in the short term given that there is unlikely to be a big impact on interest rate expectations.

Silver Prices 4H Chart


Tim is a contributing author to He is an economist and has been involved in financial markets for over 20 years as an analyst. He specialises in global economic trends, macro policy and central banks. Extensive knowledge, experience and data mining is used to anticipate trends in equities, bonds and forex with a contrarian slant. He is a graduate of the University of York with a degree in Economics/Econometrics.