Silver giving up territory to the 21-DMA

  • Precious metals giving background as risk appetite returns.
  • Eyes on the European Central Bank, equities and yields. 

Silver prices have been extending the pullback and were trading down -0.88% to a low of 17.93 from a high of 18.30 on the day. Silver for December delivery still managed to add 1.6 cents, or 0.09%, to $18.135 an ounce, following a 1.2% slump for the week for gold’s sister metal.

However, the outlook is less optimistic as markets adjust positions in light of the likelihood of a trade deal between the US and China and along with Chinese stimulus measures seeking to improve the economic growth of the second-largest economy in the world. The benchmark U.S. stock indexes have been able to move higher on the improve risk appetite which in turn is stripping away the speculative longs in precious metals and given silver's impressive rally of more than 11% last month — outperforming gold’s monthly rally last month, up 6.4%, the downside exposes a deeper retracement that gold's in percentage terms. 

Global yields and the ECB in the spotlight

Eyes will be on the bond markets and yields which brings the European Central Bank into focus this week.  Expectations are high that the ECB’s Governing Council will announce a very significant easing package at this upcoming monetary policy meeting, as signalled in July - However, the bar has been set so high that it is not unrealistic to think that the ECB could disappoint the market. 

Silver levels

Bears are taking on the 21-day moving average which guards a run to the 17.50s a being the 50% Fibo of 2016 highs to recent swing lows. On the flipside,18.50 and 19.50 will be the milestones from here ahead of the round 22 figure, then come the 27s and, finally, a 50% mean reversion of the 2011 highs YTD in the 31.70s.

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