Silver spot price lacks direction ahead of ECB and BoE

on Nov 7, 2013
Updated: Oct 21, 2019

**, Thursday 7 November:**

Today central banks will set the market tone ahead of tomorrow’s US employment report for October. Both the Bank of England and the European Central Bank are scheduled to deliver interest rate decisions, at 12.00 UTC and 12.45 UTC respectively. Neither is expected to change its monetary policy stance, although there is a belief that the ECB will open the door for a December rate cut in the wake of the lowest inflation since November 2009.

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So far today, the silver spot price has been well supported by renewed speculation that the ECB will introduce further easing. Negative real interest rates and quantitative easing in advanced economies have been frequently cited as some of the main reasons for the appreciation in the silver spot price since onset of the global financial crisis.
However, potential explicit ECB signals for additional easing could also be interpreted as bearish for the precious metal because the US Dollar Index may strengthen and push the spot price lower.

According to Credit Agricole the ECB “would not ease this month and could be too divided to do so in December, pointing to a potentially less dovish outcome than many expect.” The bottom line is that those looking for a rate cut may be disappointed, “which is also likely to provide further impetus to take profits on long dollar positions” and boost silver futures, concludes the French investment bank.

In the US, the Advance Gross Domestic Product q/q for the third quarter is due out at 13.30 UTC. Analysts expect the fiscal uncertainty in the US to have undermined the economic recovery, with growth waning to 2.0 percent from 2.5 percent in the prior quarter.
Right now, the silver spot price is trading around 21.801, down 0.04 percent intraday.
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