Silver is slightly higher in mid-morning trade today while gold sinks and stocks rise. Crude oil is flat while the dollar index moves sharply higher.
The stronger dollar index is likely having a significant negative effect on the gold market today, and while silver is not seeing the same selling pressure as gold, any buying today could be limited.
The dollar index has been under considerable pressure recently and while a good bounce is not unexpected, it remains to be seen if the greenback can put together any sustainable rally. The dollar may continue to be on the defensive until more clarity is seen regarding the pace and timing of further interest rate hikes.
There is a large amount of data to be perused by investors today. Investors have thus far gotten the latest readings on Retail Sales, MBA Mortgage Applications, PPI and Business Inventories. The Fed’s Beige Book is due out early this afternoon and could potentially sway markets.
Overall, risk appetite remains elevated after some more upbeat data out of China and as crude oil prices continue to hold above the $40 per barrel mark. While crude oil has not been garnering quite as many headlines in recent weeks, the market is still a key driver of the stock market.
The silver market is currently at the highest level since last fall and appears headed for another leg higher. A break above last October’s highs around $16.38 per ounce could potentially attract more fresh buying interest in the silver market and prices could potentially see a rapid ascent higher
The longer-term charts of silver also appear to be pointing higher. The silver market may have, at this point, built a solid base on which higher prices may be seen in the coming months and years. Of course, further weakness in the U.S. Dollar could potentially bolster the bullish case for silver further and a breakdown in stocks could also possibly drive more buying.
A key test of stocks may be in store and the market could potentially begin a fresh leg higher. On the other hand, if stocks fail to reach previous highs, or if a significant amount of negative data is seen out of China, stock investors could decide to go to cash. Such a move could potentially lead to more capital flowing into silver and precious metals as investors seek out alternatives.