The silver market is moving slightly lower this morning in early trade. Stocks are trading a bit higher while crude oil rallies and the dollar index trades higher.
The marketplace is seeing some ongoing appetite for risk as oil moves up and some positive data is seen out of China. Crude oil has found itself on the defensive again in recent days after trading above $42 per barrel. While some recent discussions about production have given oil a lift, the fact is that the world remains awash in black gold and prices may have a difficult time moving significantly higher until the supply/demand situation finds more equilibrium.
Should oil once again find itself testing the recent lows, it could potentially weigh on equity markets and possibly fuel buying in perceived safe haven assets such as gold and silver.
Investors will be focusing today on the release of the latest FOMC meeting minutes this afternoon. After electing not to make any changes to monetary policy last month, questions remain about whether or not the central bank will decide to act in June. While the U.S. economy has shown ongoing signs of improvement including in the labor market, other areas of the world economy remain a cause for concern and could potentially give the Fed reason for pause.
Either way, it seems at this point that the pace of any further hikes is likely to be very slow and gradual. This could potentially support precious metals, although it may also give stocks a boost.
Stocks have once again staged a sharp recovery after initial selling and volatility to begin the New Year. In fact, stocks are within striking distance of previous all-time highs, and a key test of the rally could be seen in the near future. Higher equities may detract from interest in silver and gold, while a slumping stock market may potentially boost interest in the precious metals.
Silver has been struggling recently and is in danger of falling back into its previous trading range. The market is currently trying to hold above $15 per ounce but is looking a bit precarious. A break below the $14.60 mark (which has already been tested once) could potentially see silver prices decline further, perhaps testing the recent lows again.
While any further dollar weakness may be supportive for silver, further equity strength and any clues as to further rate hikes could potentially weigh on the white metal.