Market Overview: Gold and silver are both seeing some moderate selling pressure this morning as as lack of fresh bullish inputs as well as buying in the dollar index weigh on the metals. The markets remain in the midst of the summer doldrums, and lower than normal trading volumes also have the potential to drive volatility. The primary theme over the last week or so has been the question of when the Fed may look to hike interest rates again. Recent economic data that has been stronger than expected may potentially pave the way for the Fed to hike in September or December. Some analysts believe, however, that the Fed will still wait until early 2017 before tightening again.
Key Data Points: There is no economic data set for release today. Investors will continue to watch the data stream closely over the next several weeks, however, looking for any clues as to the timing of the next interest rate hike by the Fed.
Outside Markets: Stocks and crude oil are declining along with gold and silver today. Equity investors are likely taking some profits as debate over the timing of another interest rate hike continues. Crude oil is also susceptible to some profit taking following recent strong gains that have driven black gold back to nearly $50 per barrel. The stronger oil market has been supportive of stocks, and thus far is not showing signs of rolling back over.
Although stocks are lower today, the path of least resistance remains higher and solid risk appetite could potentially weigh on gold and silver.
The dollar index is seeing a nice bounce today after seeing some decent selling pressure recently. The greenback could potentially see a strong reversal if the Fed signals a rate hike sooner rather than later.
The Big Picture: Gold and silver remain susceptible to selling pressure on the notion of a rate hike coming in September or December. That selling pressure could, however, be fairly short lived as the central bank is not likely to raise rates by very much anytime soon. It also remains to be seen how Brexit will affect the global economy going forward, and if the most recent stimulus efforts in Europe and elsewhere will be effective. These issues could potentially keep a floor under gold and silver. While risk appetite has remained elevated and stocks continue to march higher, the market could become vulnerable to a correction or even larger scale selloff that could drive buying in gold, silver and other perceived safe haven assets.