Giles Coghlan LLB, Lth, MA
Financial Source
The movements of the USD and real yields together provide the best fundamental outlook for silver. When real yields and the USD are moving lower that sends silver higher. The path of real yields and the USD will depend on the monetary policy outlook of the Fed. This post is written just before they meet, so that outcome will decide whether it is sink or swim time for the Fed. A dovish FOMC can offer a great opportunity to see silver longs. The seasonal pattern for February is also very strong for silver. However, a hawkish Fed with a sooner QE end, faster hikes, and a quicker start to QT would all sink silver.
From January 25 to February 24 silver has risen 11 times in the last 15 years. The average return has been 4.67%. Will silver follow its seasonal pattern if the Fed are more dovish than the market was expecting?
Major trade risks
-
The main risk for this outlook is if the Fed has taken a more hawkish stance.
-
Also, if Russia makes an incursion into Ukraine that is likely to see the USD strength and weaken Silver in the near term.
Our products and commentary provides general advice that do not take into account your personal objectives, financial situation or needs. The content of this website must not be construed as personal advice.
Recommended Content
Editors’ Picks
US economy grows at an annual rate of 1.6% in Q1 – LIVE
The US' real GDP expanded at an annual rate of 1.6% in the first quarter, the US Bureau of Economic Analysis' first estimate showed on Thursday. This reading came in worse than the market expectation for a growth of 2.5%.
EUR/USD retreats to 1.0700 after US GDP data
EUR/USD came under modest bearish pressure and retreated to the 1.0700 area. Although the US data showed that the economy grew at a softer pace than expected in Q1, strong inflation-related details provided a boost to the USD.
GBP/USD declines below 1.2500 with first reaction to US data
GBP/USD declined below 1.2500 and erased a portion of its daily gains with the immediate reaction to the US GDP report. The US economy expanded at a softer pace than expected in Q1 but the price deflator jumped to 3.4% from 1.8%.
Gold falls below $2,330 as US yields push higher
Gold came under modest bearish pressure and declined below $2,330. The benchmark 10-year US Treasury bond yield is up more than 1% on the day after US GDP report, making it difficult for XAU/USD to extend its daily recovery.
XRP extends its decline, crypto experts comment on Ripple stablecoin and benefits for XRP Ledger
Ripple extends decline to $0.52 on Thursday, wipes out weekly gains. Crypto expert asks Ripple CTO how the stablecoin will benefit the XRP Ledger and native token XRP.