Market Overview: Both gold and silver are seeing some heavy buying interest in early action today. Increasing anxiety over the upcoming Presidential election is likely fueling some safe haven demand. Donald Trump has been closing the gap between himself and Hillary Clinton, and is now in the lead according to at least one poll. From the get-go, Trump has been considered more of a wildcard when it comes to economic and geopolitical policy, and a Trump victory could potentially drive significant market volatility based on a seeming lack of clarity regarding his potential policies. With the election now less than a week away, markets in general may experience heightened volatility as investors look to square positions or initiate hedges ahead of the election results.
Key Data Points: The ADP employment report released this morning showed a reading of just 147,000 private sector jobs added in October. Consensus estimates were looking for a reading of 170,000 jobs. Although the ADP report and government Employment Situation report have been known to diverge, today’s weaker than expected ADP jobs number could potentially point to a disappointment in Friday’s non-farm payrolls data.
MBA Mortgage Applications declined, with both new purchase as well as refinancing applications falling.
The FOMC meeting will conclude today, although no action is expected from the central bank today. Rather, investors will likely focus on the statement language, and will look for further clues as to the likelihood of a December rate hike.
Outside Markets: Stocks are slightly lower in early action today, as investor anxiety over the election is on the rise and as the ADP jobs data disappoints. More and more analysts seem to be calling a top in equity markets, and a significant move lower could potentially be seen in the near future.
The dollar index is moving lower today, and has been retreating from the highs seen last week. The dollar could potentially see increasing volatility as the election approaches, and some believe that a Trump victory could lead to a weaker greenback. In addition, the uncertainty surrounding a Trump victory could potentially influence the Fed to remain more dovish with monetary policy.
The Big Picture: There are a lot of moving parts to contend with right now, and things could get a lot more dicey as the election nears. The outcome could potentially fuel significant market volatility, and could stoke demand for perceived safe haven assets such as gold and silver.