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  • Spot silver prices current trade just above the $24.50 mark, as the precious metal consolidates Monday’s gains.
  • Real yields remain under pressure, which keeps precious metals supported.

Spot silver (XAG/USD) prices are consolidating in a new range above the $24.50 level, as the precious metal clings onto the solid gains made on Monday. As things stand, the precious metal trades flat just to the north of $24.50.

Precious metals remain supported as bond yields see further declines

Bond yields on both sides of the Atlantic are seeing a further decline on Tuesday amid the market’s more tentative mood. German 10-year yields are nearing November lows and are back below -0.6%, down roughly 3bps on the day, while US 10-year yields have slipped back towards 0.90% and are also down 3bps on the day. With US inflation expectations largely stable in the mid-1.8%s, real yields have also thus come under further pressure, with the US 10-year TIPS yield dropping to lows since September of under -0.98%.

The main thing here is that inflation expectations remain elevated (which helps underpin precious metals as a hedge against future currency devaluation due to inflation), and that real yields on US bond investments (and bond investments in other countries) remain deeply in negative territory, which boosts the attractiveness of precious metals as an alternative investment.

Vaccine news could rock the boat for silver

Silver, as has been the case with precious metals more broadly, remains vulnerable to any further risk on waves as a result of more positive vaccine news. By the end of the week, the US may have authorised the Pfizer/BioNtech Covid-19 vaccine, presenting a risk to precious metals (markets do expect approval, so the risk on move might be somewhat limited).

XAG/USD carves out a new range above $24.50

Since breaking above resistance in the $24.30s-$24.40 on Monday, spot silver has formed a new range with this previous area of resistance acting as support. If this was to go, the 21-day moving average at $24.13 would come into play, as would the psychological $24.00 level and the 50-day moving average just below it at $23.95. To the upside, the main level to watch out for is the psychological $25.00 mark just above Tuesday’s highs in the $24.80s.

XAG/USD four hour chart