Market Overview: Both silver and gold are under selling pressure today in what may be some risk aversion and position squaring ahead of the Fed symposium from Jackson Hole, Wyoming this week. Expectations for a more hawkish Fed have risen in recent weeks as several key data points have shown better than expected readings. While it seems unlikely that the central bank would hike in September, this is still a possibility although December seems to be the time markets think some action from the central bank could be seen.
Key Data Points: MBA Mortgage Applications this morning showed purchase applications slid .3 percent and are now at the lowest point of the year. Unfortunately for the housing sector, recent mortgage data may point to slowing activity even in spite of extremely low mortgage rates.
Existing Home Sales data released this morning also point to a slowdown, as sales of existing homes slid to an annualized rate of 5.39 million. The year over year rate of home sales has been on the decline, and is now in negative territory at 1.6 percent.
Markets still have plenty of data to look forward to the rest of the trading week, with the Fed symposium likely taking center stage.
Outside Markets: Stocks are slightly lower today in slow trade, while crude oil is also losing ground. The dollar index is seeing some moderate upside today, although the greenback remains on the defensive. Interest rates are seeing a small rise today. Overall, price action remains relatively muted as low trading volumes are seen.
Some analysts are voicing concerns over current equity market levels, but the path of least resistance for stocks remains higher until proven otherwise.
Volatility could pick up, however, as the Fed commentary gets under way Thursday and Friday.
The Big Picture: Whether or not the Fed raises interest rates in September or December remains a key point of focus for investors. While the idea of a rate hike seemed to have been baked into the cake for gold and silver, recent price action may be suggesting otherwise. The metals are likely seeing selling on position squaring ahead of the Fed, and that selling could potentially be exaggerated by light trading volumes. A hawkish sounding Fed could possibly fuel another leg lower in gold and silver, while a dovish sounding Fed could drive a quick rally from current levels. While gold and silver could see additional selling if the central bank does tighten, any significant downside in these metals may be met by bargain hunters.