Market Overview: Both gold and silver are moving higher in early action today as uncertainty over the new Presidential administration fuels some risk aversion. The Trump administration has promised quick action on a number of key issues, and investors may decide to take a wait-and-see approach before placing any big bets. Thus far, the Trump rally is still showing signs of fading further, and the recent rally could potentially prove to be a case of “buy the rumor sell the fact.”
Key Data Points: There are no major economic reports scheduled for release today. The rest of the week will provide investors with plenty of data to chew on, however, as markets will get the latest readings on Weekly Jobless Claims, MBA Mortgage Applications, Durable Goods Orders, Consumer Sentiment and more.
Friday’s GDP data will likely be one of the data highlights of the week and could be watched closely by the Fed. A strong reading could potentially bolster the case for a faster pace of rate hikes while a weak reading could potentially have the opposite effect.
Outside Markets: Stocks are moving modestly lower today as some risk aversion has set into the marketplace. Investors will likely be anxious to see some quick progress made by the Trump administration, and signs of such progress could potentially fuel more upside in the recent rally. On the other hand, if progress is not seen in the near-future, investors may grow more anxious and decide to book profits.
The dollar index is moving lower again today and while not far from recent highs has not been able to challenge those highs again. It is possible that the greenback has topped, at least on a short-term basis.
Interest rates are moving lower today as risk aversion fuels buying in bonds and notes.
The Big Picture: As the Trump administration settles in following the inauguration on Friday, expectations are running high. Investors will likely look for quick progress to be made on a number of key issues. Although implementation of new policies to address these issues may take time, investors will likely want to see more details on Trump’s proposed policies at the very least. An ongoing lack of detail could make markets more nervous, and could potentially drive a significant sell-off.
Gold and silver have been gaining some upside momentum in recent weeks, and could potentially see further upside on improving technicals and increasing risk aversion.
