Market Review: Gold and silver are both higher in early action Friday as stocks and the dollar move slightly lower. Although stock markets have carved out fresh all-time highs in recent trade, these markets may be overdue for a pullback and could potentially see some profit taking in the near future. There are a number of major issues coming up that could have a significant impact on global markets including the Trump administration’s tax reforms and Trump’s address to congress on February 28th.
The metals markets may see ongoing buying interest as a large degree of uncertainty remains surrounding Trump’s policies and other issues.
Key Data Points: The latest reading on New Home Sales today showed a reading of 555k, well below consensus estimates of 576k.
The latest reading on Consumer Sentiment showed a strong reading of 96.3, although the reading is well below the post-election high.
Outside Markets: Stocks are taking a breather today thus far, and are slightly lower in early trade. With the recent string of higher closes, investors may be quick to take profits if the market starts to show signs or reversing course. Further upside in stocks may be limited for the time being as investors await more details about the Trump administration’s fiscal spending plans and tax reforms.
The dollar index is slightly lower today but not far from recent highs. Further upside in the greenback could be limited until more clarity is seen on the Trump Administration’s tax and fiscal spending plans.
The Big Picture: Gold and silver may see ongoing buying interest as geopolitical concerns fuel some degree of risk aversion. The metals complex may also await more clues from the Fed about the timing and pace of further rate hikes from the Fed. There is a great deal of debate about the central bank’s plans, with some analysts calling for less than the three hikes anticipated by the Fed while others are looking for four hikes.
Stocks have been on a steady climb higher, and with recent all-time high closes there may be some concerns mounting about the potential for a top in equities.if stocks start to show some signs of breaking down, more capital could potentially find its way into gold and silver . The path of least resistance in these metals is higher for now, and ongoing geopolitical uncertainty may keep the metals well-supported.
