Market Overview: Both silver and gold are seeing some slight gains in early action today as stocks attempt to find some more solid footing. Bargain hunting and short covering are likely being featured, although gold and silver remain on the defensive. Investors continue to speculate on the Fed’s plans regarding interest rates, and a hike in September looks pretty unlikely at this point. Stocks have gotten more volatile in recent action, and this volatility could potentially continue as rate hike fears take further hold.
Key Data Points: MBA Mortgage Applications this morning showed a busy week for September 9th, with the seasonally adjusted composite index posting a rise of 4.2 percent. Purchase applications saw a much stronger gain than refinancing applications in what could potentially be a good sign for the housing sector.
There are no other major pieces of economic data set for release today. Investors will, however, still get the latest readings on Retail Sales, PPI, Weekly Jobless Claims, Empire State Manufacturing, Industrial Production, CPI and more before the end of the week.
Outside Markets: Stocks have seen a sharp rise in volatility in recent action as investors get anxious over the prospect of rising rates. Stocks have seemingly hung on every word from various Fed officials in recent days, and investors will now have to wait until next week’s Fed to gain any additional insights into the central bank’s plans.
The dollar has been on the rise as chances of an interest rate hike have increased, and recent dollar strength is likely a factor in gold and silver’s lackluster performance.
Crude oil is continuing its decline from recent highs, and could potentially be poised to retest recent lows. This crude oil weakness may also be playing a part in recent equity volatility, and slumping oil prices could potentially fuel further selling in stocks.
The Big Picture: Right now it seems it is all about the Fed. Markets could potentially see further volatility heading into next week’s FOMC meeting, although it is also possible that markets drift relatively sideways into the announcement. Silver and gold could remain under some pressure if the Fed provides stronger hints at a December rate increase, while any dovish rhetoric could potentially provide the metals a much-needed boost.
Until then, silver and gold may take their cues from the dollar index, stocks and overall sentiment. Both of these metals need to see some strong buying and a reversal on the charts to negate recent bearish price action and sentiment.