Market Overview: Silver is trading just above the flat line in early action today, while gold adds several dollars per ounce. Investors appear to be feeling a little more anxious these days, as the new Presidential administration attempts to implement policy. Uncertainty over the new administration along with upcoming elections in Europe have investors slightly edgy, and stocks have taken a pause from the recent rally. Gold and silver may potentially continue to benefit from increasing risk aversion along with an improving technical picture.
Key Data Points: In the only major economic release slated for today, MBA Mortgage Applications showed a rise in both new home application activity as well as refinancing activity. Ongoing strength in mortgage applications may point to further gains in home sales.
The remainder of the week will bring investors the latest readings on Weekly Jobless Claims, Consumer Sentiment and more. There will also be some Fed officials speaking at various engagements.
Outside Markets: Stocks are moving slightly lower today as ongoing uncertainty over numerous issues appears to be taking a toll. The broad market S&P 500 is not far from recent highs, but has thus far not been able to mount a fresh leg higher.
Bonds and notes are seeing some buying interest again today as the mounting uncertainty over some of Trump’s policies are weighing on sentiment and likely fueling some risk aversion.
The dollar index is flat to slightly lower, and remains a ways from its post-Trump election victory highs. The dollar may be waiting for further clarity from the Fed regarding the next rate hike, and investors may also be wanting to see what the new administration is able to accomplish in terms of fiscal spending plans.
The Big Picture: The ongoing debate over the Trump administration’s immigration ban, as well as numerous other issues seem to be taking a toll. Trump’s full cabinet is still not in place, and there is significant debate surrounding many issues. The longer these issues persist, the more potentially damaging they may become to investor sentiment and markets. Stock markets may become increasingly vulnerable to a larger sell-off if more detail regarding tax cuts and fiscal spending is not seen in the near-future.
A risk-off mentality could potentially fuel further buying in silver and gold, which appear to already be benefitting from some investors angst. The potential for increasing risk aversion and an improving technical posture could potentially pave the way for further upside in these metals.