Market Overview: Both silver and gold are coming under some decent selling pressure today as a rising dollar index and stronger equities are taking a toll. Risk appetite continues to be on the mend following post-Brexit volatility, and stocks could be poised for further upside as investors seek yield. Fighting the Fed is typically a losing battle, and with low rates and additional stimulus measures being undertaken by some central banks, equities and risk assets could potentially have some smooth sailing for the foreseeable future. This could potentially keep any further upside in silver or gold at bay unless some fresh bullish inputs are seen.
Key Data Points: MBA Mortgage Applications showed a decline for last week, as a slight rise in mortgage rates dented borrower enthusiasm. That being said, however, year over year applications are up by solid double digits and could stay relatively robust if rates stay low for some time.
Investors will still have more data to consider later in the week, with the latest readings on Weekly Jobless Claims, Existing Home Sales, Leading Indicators, PMI Manufacturing Index Flash and more set for release.
In addition to the U.S. data, the ECB will be meeting Thursday and while no action is expected at this week’s meeting, the ECB could potentially discuss plans for further stimulus measures.
Outside Markets: Stocks continue to forge into new all-time high territory as risk aversion has abated. With the recent upside breakout, equities could have some room to run further to the upside, and additional strength in stocks could potentially weigh on silver, gold and other perceived safe haven assets.
The dollar index is on the rise again today, and appears poised for further upside. This strength in the dollar is likely weighing on silver and gold today, and could potentially drive further selling in precious metals.
Interest rates are moving slightly higher in early action today, and so far it appears that the recent divergence between rates and stocks may be coming to an end. If stocks remain strong, rates could continue to rise as more and more investors seek out potentially higher returns.
The Big Picture: The silver market has not been able to maintain previous bullish momentum, and the lack of any attempts at recent highs may be a cause of concern for the bulls. If risk appetite continues to improve, silver could see more selling and could even retest the previous upside breakout level around $18 per ounce. While a stronger dollar and higher stocks may weigh on silver, the marketplace remains vulnerable to headline risks surrounding Brexit, China and other economic issues. This could potentially keep the white and yellow metals from seeing any significant declines in price.