Market Overview: Silver is moving slightly higher today while gold is slightly in the red. Low summer trading volumes are likely a factor today in the mixed action being seen in these two precious metals, and volumes are likely to remain very thin through the Labor Day Holiday weekend. Market participants are closely examining the economic data this week, looking for any further clues on whether the Fed may hike rates next month or in December. Friday’s jobs data could hold the key to the timing of the next interest rate hike.
Key Data Points: MBA Mortgage Applications released this morning showed an uptick last week, but with most of the increase in activity coming from refinances. Purchase applications are now reportedly only five percent higher than the same week one year ago, despite mortgage rates remaining at exceptionally low levels.
The ADP Employment Report showed the country added 177,000 private sector jobs in August. Consensus estimates were looking for an increase of 175,000 jobs. While lower than July’s figures, this number could potentially point to a strong non-farm payrolls report on Friday, although these two measures have been known to diverge.
Chicago PMI slowed, with a reading of 51.5. Consensus estimates were looking for a reading of 55.2.
The Pending Home Sales Index was soft for the month of July, registering a reading of
Outside Markets: Stocks are slightly lower today as investors still try to determine the likelihood of a rate hike in September or December. Not doing stocks any favors, crude oil is also declining again today as hopes for a production freeze seem to be fading.
The dollar index is moving up again, and has put together a very respectable win streak in recent sessions. The greenback has been strengthening on the idea of higher rates, and further upside in the dollar may start to really weigh on gold, silver and other commodities.
The Big Picture: Silver has found itself on the defensive recently, although seems to be making a stand around the $18.50 per ounce level. Precious metals may simply look to tread water for the time being, awaiting more clarity on the timing of the next interest rate hike. Without any fresh bullish inputs, however, silver and gold may come under additional pressure as risk appetite remains favorable. If stocks begin to show signs of a top, however, capital could potentially flow out of equities and risk assets and possibly find its way into perceived safe havens such as silver and gold.