Market Overview: Both gold and silver are moving higher in early action to begin the trading week. Gold has been moving higher since the middle of December, and increasing interest in the yellow metal would come as no surprise as the New Year gets underway. Trading volumes will be returning to normal levels, and investors may potentially do some reallocating to kick of 2017. For the time being, risk appetite remains high and gold and silver may have a difficult time putting together any significant rallies. As the new administration gets ready to take over, however, investors will want to see fast signs of progress, otherwise risk aversion could potentially set in.
Key Data Points: There are no major economic reports set for release today. The rest of the week, however, investors will get the latest readings on MBA Mortgage Applications, Weekly Jobless Claims, PPI, Retail Sales and more. There will also be a number of Fed officials speaking at various engagements this week.
Outside Markets: Stocks are slumping slightly this morning in early action as investors take stock of recent commentary from Fed officials and as investors get ready for corporate earnings. Markets may be looking for more reason to continue driving stocks to fresh record highs, and a pullback at this point may be necessary before further upside.
The dollar index is moving higher today and remains not far from recent highs. The dollar has seen a pullback in recent action, as bond yields have declined.
Bond prices have been moving higher since reaching a bottom last month, and yields could potentially continue to creep back down if stocks begin to run out of gas.
The Big Picture: As the New Year gets underway, investors may look to shift some assets around and book some profits from the recent stock market rally. The new Presidential administration will be taking office in less than two weeks, and some significant economic and geopolitical changes could be in store. Markets have risen sharply on the idea of lower taxes and fiscal spending, but it remains far from clear exactly what policies will be introduced and the size and scope of any fiscal spending plans. Although the path of least resistance in stocks remains higher, markets will want to see some key plans discussed on the campaign trail put into action.
As a number of economic and geopolitical unknowns remain, gold and silver could potentially see increased buying interest as the New Year gets underway.