Market Overview: In mixed action this morning, gold is slightly lower while silver is moving slightly higher. These precious metals markets are possibly just taking a breather today following yesterday’s gains. The demand for perceived safe haven assets such as gold and silver may continue to rise as the new Presidential administration gets ready to take office on Friday. Following the Trump election victory, stocks and the dollar both have rallied substantially, however, that rally appears to be running out of gas. Markets are looking for forward to a considerable batch of economic data today.
Key Data Points: In perhaps the biggest data release set for today, the most recent reading on CPI showed inflation in line with expectations with a CPI reading of .3 percent month-over-month and a core CPI month-over-month reading of .2 percent.
MBA Mortgage Applications showed a decline in purchase applications for new homes and a rise in refinancing applications.
Markets are still due to get the latest readings on Industrial Production, the Housing Market Index and Beige Book. In addition,there are two Fed officials speaking today including Fed Chairwoman Janet Yellen.
Outside Markets: Stocks are modestly higher in early action today as investors likely tread carefully ahead of Friday’s much anticipated Presidential inauguration. Stocks have yet to see a large-scale breakdown, but have also not been able to muster fresh all-time highs again.
Perhaps the Trump rally has gotten ahead of itself, and is due for a pullback. That being said, the march higher in stocks could potentially continue well into the first quarter, however, investors will want to see some significant progress being made on Trump’s economic policies. A lack of progress could potentially fuel safe haven demand in gold and silver and give investors reason to book profits in equities.
The dollar index is moderately higher today after seeing some recent selling. The greenback will be monitored closely following some recent comments from Donald Trump on the strength of the currency.
The Big Picture: As the inauguration of Donald Trump quickly approaches, investors may be willing to give the new President the benefit of the doubt. That being said, progress will likely need to be made quickly if the current rally in stocks is to continue.
Given the recent upside in gold and silver, there appears to be a degree of risk aversion in the marketplace. In addition to domestic economic policies, investors will also be paying attention to the Fed and its plans regarding interest rates as well as any new developments on the geopolitical front.