Market Overview: Silver and gold are both moving modestly higher following the FOMC meeting statement this afternoon. The technical posture for silver remains constructive and the market could be gearing up for a retest of recent highs. Today’s FOMC meeting conclusion and subsequent press conference will likely be the most important input watched by investors this week.
Key Data Points: Without question, today’s FOMC meeting and commentary has been highly anticipated yet has come and gone without too much of a reaction thus far. The Fed held rates steady and did not give investors more clues as to the timing of additional rate hikes. Fed Chairwoman Janet Yellen may stick to some familiar language regarding the idea of additional hikes and markets may also just have to take a wait and see approach. While Ms. Yellen’s comments may sway opinion slightly one way or the other, investors may be paying close attention to any hawkish statements that could put a July rate hike on the table.
Initial reactions, however, appear to favor the dovish camp and it seems more likely that another rate hike will not be seen until after summer.
The latest reading on PPI released earlier this morning showed an increase of .4 percent, beating consensus estimates of a .3 percent rise. While year-over-year inflation remains soft, this recent rise was the hottest number seen since last May and could potentially be encouraging.
Outside Markets: Stocks were quiet most of the day heading into this key announcement and are moving moderately higher following the statement. Stocks have backed off of recent highs as some risk aversion has set in, although it remains too early to tell if this is the beginning of a larger correction or just a pullback before another run at new all-time highs.
The dollar index is under some pressure today and is seeing more selling following the FOMC statement. Without any hawkish commentary, the dollar could potentially stay under pressure and challenge the early May lows. A break of those lows could potentially be a key driver for higher gold and silver. Without any further direction from the Fed at least for now it seems that the path of least resistance could point lower.
The Big Picture: The debate over the timing and pace of further hikes appears set to continue. While some areas of the economy appear to be gathering some steam, others still appear to be lagging. The Fed will likely want to see a clearer pattern of growth before raising rates again. This could potentially keep a floor under both silver and gold prices.
Investors may now turn their attention to the upcoming “Brexit” vote. While it is difficult to say how such a vote could affect markets, risk aversion could possibly rise as the vote approaches and an exit vote could potentially panic investors.