Silver under pressure as USD firms in a bullish correction

• Silver prices on the backfoot as US dollar firms from the lows.
• US economic data set up a grim outlook for the rest of the year. 

For precious metals, Investors are weighing up the positive vaccine news against the spectre of further lockdowns in the immediate term and increased economic stimulus.

Weakness in the USD at the start of the week also boosted on investor appetite, despite further outflows from gold-backed ETFs.

The price of silver, however, is on the back foot today, down some 0.64% on the day so far having travelled from a high of $24.8096 to a low of $24.4396.

Regardless of the fact that net USD positions had dropped back into negative territory, the positive vaccine news has boosted the better tone in markets, which is weighing on the precious metals. 

The US dollar is also slightly firmer on a spot basis which is not helping either. The DXY is off the lows and consolidating in a bullish correction, albeit down 0.23% on the day still at the time of writing. 

• Powell speech: Unlikely new Fed framework on inflation will change global role of dollar

Besides the vaccine news, precious metals have also been softer on the perception that the Republicans may hold the Senate which could mean no large scale tax hikes or regulation.

''While the initial reaction to the second round of vaccine news was another knee-jerk lower, the move failed to hold with less positioning to be shaken out,'' analysts at TD Securities explained. 

''A reactive rather than proactive Fed can still keep the door open for the pain trade to grow in the near-term, as we approach the December meeting. Real rates should continue on their downward trajectory and ultimately continue to fuel a bull market in gold into 2021. 

Fed's Bostic: Temporary job losses are now becoming permanent

As for the economic outlook, expectations are that the economy will filter without one before vaccines can be distributed. 

As a warning of things to come, the data on Tuesday showed Retail Sales increased less than forecast in October, with the potential for even further slowing for November and December, spelling out tougher periods for US businesses.

October US retail sales rose 0.3% month-on-month versus 0.5% expected while September was revised down to 1.6% from 1.9%. Meanwhile, factory production accelerated but remained well below levels prior to the pandemic.  
Besides data.