Market Overview: Precious metals are mixed in early action to begin the new trading week, with gold slightly higher and silver slightly lower. The trading week looks to get off to a quiet start, and volumes may dissipate throughout the week as the Christmas Holiday weekend approaches. Several key markets including stocks, the dollar index and treasuries could all potentially take a bit of a breather this week as they have covered significant ground in just a few short weeks.
Key Data Points: The latest reading on PMI Services Flash will be released later this morning.
Markets will likely pay more attention to commentary from Fed Chairwoman Janet Yellen this afternoon as she discusses the state of the jobs market at the University of Baltimore.
The rest of the week is fairly light on data release as well, with markets getting the latest readings on MBA Mortgage Applications, Existing Home Sales, Durable Goods Orders, GDP, Leading Indicators Consumer Sentiment and more.
Outside Markets: Stocks are set to open the trading week flat, and are seemingly in need of a pullback before finding even higher ground. The Trump rally appears poised to continue into the new year, and thus far markets have not shown signs of being spooked by the notion of a faster pace of interest rate hikes.
The dollar index is also off to a flat start to begin the new trading week, and may also need a pullback before seeing higher prices. Trump’s economic plans are considered inflationary, and with the Fed perhaps raising rates a little faster than expected the dollar could remain well-supported. Further dollar strength may continue to weigh on gold and silver prices, and at some point could also potentially start to pressure equities, as well.
Treasuries are higher this morning as yields decline. The bond market has been under significant pressure since the Trump election victory, and could potentially be in the process of finding a near-term bottom.
The Big Picture: Current market trends could last into the end of the year, and gold and silver could potentially remain under pressure in the absence of any fresh, bullish catalyst. Sentiment surrounding the gold and silver markets remains decidedly bearish, and the markets could be getting close to an extreme level of bearishness that could potentially indicate a bottom may be forming. The markets could potentially see another final wash out before finding more stable footing. A bottom may be found sooner rather than later, however, and analysts cite many reasons that gold and silver could possibly stage a significant reversal in 2017.