Market Overview: The silver market is seeing some strong buying today even as the global equity selloff appears to be abating, at least for now. Stocks have already retraced about half the losses seen directly following the Brexit vote, and calmer heads appear to be viewing the recent slide as a buying opportunity. The buying being seen in gold and silver today could be attributed to the notion that central banks will likely have to remain extremely accommodative given the uncertainty surrounding the Brexit vote.
Key Data Points: Investors got the latest reading this morning on MBA Mortgage Applications which showed applications fell for the third straight week. While housing has shown some signs of improvement, the recent dip in mortgage rates has apparently not had much of an impact on would-be home buyers.
The latest reading on the Pending Home Sales Index showed a 3.7 percent decline for May, and could point to slowing activity in the early summer months.
Markets will still look forward to more data to finish out the trading week, with the latest readings on Weekly Jobless Claims, Chicago PMI, Motor Vehicle Sales, ISM Manufacturing and Construction Spending set for release tomorrow and Friday.
Outside Markets: Equities are rising sharply again today as the initial shock over the Brexit vote may be dissipating. That being said, the market could remain vulnerable to further selling and it remains to be seen if stocks will be able to rally to pre-Brexit levels.
Crude oil is also rallying today, as stronger risk appetite and the possibility of rates remaining low for the foreseeable future drive buying
The dollar index is lower today after seeing some safe haven buying after Brexit. The index could come under pressure once again, however, if risk aversion declines and the Fed signals it may stay on hold for longer than anticipated.
The Big Picture: Investors are still likely trying to sort out the potential implications of Brexit, and this process could take some time. Given the uncertainty surrounding this issue, global central banks are likely to keep rates low, or even ease further. This notion seems to be fueling buying interest in gold and silver today, and some ongoing risk aversion is likely also a major factor. The silver bulls seem to be in firm technical control, as the market is making fresh highs. From a longer-term perspective, the silver market appears to have put in a bottom, and higher prices could be in store in the coming months and years. With the current global economic backdrop, the rise in silver and gold could potentially be swift. Dips in silver and gold are likely to be bought unless proven otherwise, and these metals could potentially be in the beginning phase of a multiyear run higher.