Market Overview: Gold and silver are both under selling pressure in early trade today, as risk appetite remains robust. This appetite for risk to begin the new trading week comes in spite of yesterday’s referendum in Italy producing a “no” vote to constitutional reforms. The Italian Prime Minister tendered his resignation as he said he would in such a case, and although markets saw a little movement on the news, things settled down rapidly. Recent discussions on the issue have centered around the health of the Italian banking and financial system, and Italy’s banks may remain a source of potential concern.
Key Data Points: The latest reading on the PMI Services Index will be released later this morning.
Markets will also get the latest reading on the ISM Non-Manufacturing Index. Consensus estimates are looking for a reading of 54.9 to 56.5.
The rest of the trading week will see some key data points released as well, with markets getting the latest readings on Factory Orders, Weekly Jobless Claims, MBA Mortgage Applications, Consumer Sentiment and more.
Outside Markets: Stock index futures are pointing to a higher open this morning even after being down overnight. The market has thus far shown only a very modest pullback from recent highs, although you have to wonder just how much more might be left in the tank. Some analysts are now suggesting that the stock market rally has been overdone, and that a pullback is becoming more and more likely.
Crude oil is higher this morning and is likely lending the stock market some support. Oil is trading at over $52 per barrel, and will look to put even more distance between current prices and the $50 per barrel mark.
The dollar index is slightly lower this morning in early action, but remains not far from recent highs.
The Big Picture: The “Trump” rally appears ready to continue, although how much longer it will go on remains to be seen. Markets have covered a lot of ground in just a few short weeks, and some analysts are suggesting that some of these moves have been overdone.
Gold and silver have thus far not carved out fresh lows, although the longer these markets remain near recent lows, the more vulnerable they may become to a fresh push lower. While gold and silver still seem to be lacking any fresh, bullish catalyst to take prices higher, bargain hunting and a potential pick-up in physical demand could potentially halt the selling near current levels and fuel a reversal higher.
