Market Overview: Both silver and gold are moving higher today, as some dollar index weakness encourages buying. Stocks are relatively quiet as investors await more economic data and any further clues from the Fed about the potential for a September or December interest rate hike. Summer trading volumes appear to have arrived, and price action could be relatively muted over the next few weeks as investors get in last minute vacations.
Key Data Points: MBA Mortgage Applications this morning showed a rebound from three previous weeks of declines. Mortgage applications rose by three percent, while refinancing activity rose by 10 percent. Ongoing low mortgage rates appear to be enticing more buyers to make purchases or refinance existing loans, and any declines in 30 year mortgage rates may fuel additional activity.
While this week is lighter on data, investors will still get the latest readings on Weekly Jobless Claims, Import and Export Prices, PPI, Retail Sales, Consumer Sentiment and more.
Any stronger than expected data may help drive expectations of a 2016 rate hike, while any significant misses may further the notion that the central bank will remain on hold until next year.
Outside Markets: Stocks are slightly lower in quiet trade as low trading volumes allow markets to drift. Markets are just off fresh all-time highs, and it seems that there are more and more bullish calls coming from analysts even at what some might consider currently over-inflated levels. The Dow at 20,000 is mentioned today, and stocks could have some room to run higher.
Crude oil is slightly higher today, although it remains quite vulnerable to further selling. The recent rally seen in crude may be nothing more than a large short covering rally, and prices could potentially roll back over to $30 per barrel or possibly even lower based on the ongoing supply glut.
The dollar index is losing ground today as some weak economic data yesterday weighs on the greenback and expectations for another rate hike this year may be on the decline.
The Big Picture: Silver remains a “buy the dips” market, as the recent selloff once again found buyers around the $19.50 level. Unlike gold, silver may potentially benefit from both investment and industrial demand, and any signs of an improving economy could possibly boost silver. On the other hand, silver could also see further buying interest on signs of economic weakness, as investors may turn to perceived safe havens.
Overall, silver is showing some significant signs of a long-term bottom being reached, and from a technical standpoint is looking strong.