Market Overview: Both gold and silver are moving higher in early trade this morning,
although both metals are well-off their overnight highs. Gold and silver may finally be
seeing some bargain hunting come into the market, and shorts may also be doing some
covering following the recent move lower in both metals. The highly anticipated OPEC
meeting is likely to take center stage this week, as hopes for a production cut have
recently dwindled. Nevertheless, a deal could potentially be reached that could possibly
stabilize oil prices and even send oil higher from current levels. On the other hand,
some analysts have suggested that if a deal is not reached, oil could potentially be
headed back to the $30 per barrel level. This could potentially weigh on both equity and
precious metals markets.
Key Data Points: Investors will get the latest reading on the Dallas Fed manufacturing
survey later this morning. Consensus estimates are looking for a reading of 2.0.
There will be plenty of other data for markets to chew on this week, including the latest
readings on GDP, Consumer Confidence, MBA Mortgage Applications, Chicago PMI,
Pending Home Sales, Weekly Jobless Claims and more. The highlight of the data week
will likely be Friday’s Employment Situation report. Consensus estimates are looking for
an increase of 170,000 jobs with the unemployment rate steady at 4.9 percent.
Outside Markets: Stock index futures are pointing to a slightly lower open this morning,
as anxiety over the OPEC meeting may cause some investors to book some profits.
Treasuries are seeing a nice bounce today, and are likely being fueled by bargain
hunting and short covering following the significant slide seen since election day.
The dollar index is slightly lower in early action today, and some profit taking may also
be seen in the greenback.
The Trump rally still appears to be going strong, and although some of these markets
may be taking a breather today, the path of least resistance remains higher for stocks
and the dollar and lower for treasuries.
The Big Picture: With stronger equities and a higher dollar, the precious metals bulls
have had little reason to buy in recent weeks. That being said, the recent slide in prices
may potentially be viewed by long-term investors as a great buying opportunity, and
some bargain hunting comes as no surprise. What remains to be seen, however, is if
these metals have found a near-term bottom. If stocks and the dollar continue their
march higher, gold and silver could potentially have more work to do on the downside
before finding a significant bottom.
