Market Overview: Both gold and silver are under moderate selling pressure in early action today as some profit taking is likely being seen. Despite the selling so far today, the gold market has gotten the New Year off to a good start, and the rise in gold in recent action could potentially be indicative of growing uncertainty about economic and geopolitical policies once the Trump administration takes over. Yesterday’s highly anticipated Trump press conference did not do much to alleviate any concerns, as the conference did not include any more details about tax cuts or fiscal spending plans.
Key Data Points: The latest reading on PPI was released earlier this morning and showed a gain of .3 percent, right in line with analyst expectations. This reading has boosted the year-on-year rate to 1.6 percent, which shows inflation creeping higher.
Investors also got the latest reading on Retail Sales this morning which showed a gain of .6 percent, although once autos are stripped out that gain declines to just .2 percent. The data shows consumers did not spend much to end the year.
The latest reading on Consumer Sentiment came in at 98.1 with consensus estimates looking for a reading of 98.6. Sentiment has been on the rise since the Presidential election and has now registered a new cycle high.
Outside Markets: Stocks are moving higher this morning and remain near previous all-time highs. Despite some recent hiccups, the stock market could potentially take another run at those highs and further gains could possibly extend well into the first quarter.
The treasury market is seeing some pressure again today as recent inflationary data is pushing rates higher. Although the bond market has largely stopped the bleeding seen following the Presidential election, rates may continue to push higher driving bond prices lower.
The dollar index is slightly higher today and has backed off from its recent highs. Like stocks, the dollar may be a bit overextended and may need to see more back and fill trade before possibly continuing higher.
The Big Picture: For now, the Trump rally remains intact although it is showing some signs of fading rapidly. Investors will want to see progress made quickly by the new administration once it takes office, and a failure to deliver could potentially set stocks up for a good fall. Gold and silver may potentially see further buying interest if risk appetite gives way to risk aversion, and with so many economic and geopolitical unknowns right now, these metals may potentially continue to trend higher.
