The silver market is slightly lower this morning in quiet trade as stocks decline, crude oil moves higher and the dollar index gains ground. After trading over $18 an ounce to begin the trading week, silver has been seeing some slight selling pressure that may simply be profit taking following the recent gains.
Any downside in silver may potentially be limited, as the bulls may look to buy any significant dips. From a technical standpoint, the silver market looks quite strong right now and some back and fill trade should be expected. From a longer-term view, silver appears at this point to have put in a meaningful bottom, and the path of least resistance could potentially remain higher.
Silver and gold, as well as some other commodities, have been seeing some benefit from a sliding dollar index in recent trade. After trading around the 92 level recently, the dollar index has been seeing some buying. Many are possibly now wondering if the recent trade below prior support will prove to be a false breakout. While some rallies should be expected, if a large short position exists that needs to be unwound, the dollar index could potentially gain back some significant ground.
Currency markets obviously have a lot to consider currently, and the dollar index may potentially see limited movement until more clarity is seen from the Fed regarding the pace and timing of further interest rate hikes.
In what could potentially be an indication of a weaker than expected non-farm payrolls number on Friday, the ADP report this morning showed just 156,000 private sector jobs added which was significantly below consensus estimates of about 200,000 jobs added. It should be noted, however, that the ADP report and non-farm payrolls report have exhibited some wide divergences before, and just because the ADP number was a miss does not necessarily mean that non-farm payrolls will miss, as well.
Although well off their morning lows, stocks are under some pressure again today and further downside could potentially be in store. Equities have rolled over a bit from previous levels near all time highs, and it remains unclear whether this is the beginning of a larger pullback or correction or whether it is simply another dip that will be bought. Silver could potentially see further buying interest if equities weaken, and for now will likely be driven by the dollar and a strong technical backdrop.