Market Overview: Both gold and silver are modestly higher in early trade today. In what will likely be a very low volume trading week, gold and silver could potentially benefit from some short covering as well as back and fill trade in key outside markets. Markets continue to digest the recent Presidential election, and for the time being economic optimism appears robust. That being said, several key markets have had quite a run since the election, and some profit taking and short covering should come as no surprise.
Key Data Points: There is no key economic data set for release today. Federal Reserve Vice Chairman Stanley Fischer will be discussing monetary policy, inflation and the economic outlook at the Council on Foreign Relations in New York.
The rest of the trading week is very light in terms of data, but investors will get the latest readings on Existing Home Sales, Richmond Fed Manufacturing Index, MBA Mortgage Applications, Durable Goods Orders, Weekly Jobless Claims, New Home Sales, Consumer Sentiment and more.
Outside Markets: Stocks are higher once again today as the Trump rally marches on. Equities may also be getting a boost from higher crude oil today, as the oil bulls have come back out in anticipation of a production cut at next week’s OPEC meeting.
Although stocks could potentially see a pullback at some point, the equity markets could also have some room to run further to the upside.
Bond and note prices are slightly higher to begin the new trading week, and the market may be trying to stabilize after the recent sell off. Interest rates have seen a sharp rise since the election, and the Fed hiking next month seems to be a near- certainty at this point.
The dollar index is taking a bit of a breather today as some profit taking may be seen in the greenback. The dollar has been significantly stronger since the election, and is now trading at the highest levels since the early 2000s. Dollar strength has almost certainly been a contributing factor to gold and silver’s recent downside.
The Big Picture: While optimism over the economy going forward remains high, at some point the current state of euphoria is likely to wear off. Many unknowns remain and it remains unclear if many of the discussed plans and policies will be implemented when all’s said and done. Although the path of least resistance remains lower in gold and silver, these markets could potentially be getting close to a near-term bottom.
