As financial conditions remain loose with central banks keeping monetary policy expansive, upside in global bond yields remain capped and thus provides a supportive outlook for precious metals. Last week, we looked at the importance of falling real yields providing a bullish outlook for gold prices. With this in mind, silver prices have also been underpinned, while there is a potential for outperformance in silver, which is highlighted in the gold/silver ratio (Figure 1), given that this precious metal performs better during a recovery phase.
Silver prices have seen a breakout to reach 1-month highs, rising to $18.40. However, key resistance in the form of the descending trendline from the September 2019 peak has capped upside for now. While the outlook remains supportive for silver prices, a breach above trendline resistance is needed for confirmation, which in turn could see a return to the pre-COVID 2020 peak before the 2019 highs.