Gold: $1,294.41 0.73
Silver: $17.20 0.01
0
February 5th Mid-Week Market Update
Article By: Matt Zeman on February 05th, 2014

Both silver and gold prices are moving higher this morning as nervous investors continue to put money to work outside of the stock market and some technical buyers enter the market.

Earlier this morning, investors got to digest the latest ADP employment report. The report came in close to consensus estimates but still appears to have some investors jittery ahead of Friday’s much anticipated non-farm payrolls data.

As of this post, stocks are under pressure once again with the broader S&P index trading lower by 10 handles or so. The non-farm payrolls report due to be released on Friday will likely be the biggest data point of the week. Consensus estimates are looking for an increase of 181,000 jobs with the unemployment rate holding steady at 6.7%. A miss on this number could prove devastating for stocks, as investors have already been cashing in some profits due to concerns about the economy slowing and emerging markets currency strains. Should this number come in below expectations, it could drive gold and silver prices higher as the dollar could weaken and stocks could continue their losing ways of late.

Should the jobs data beat expectations, however, it could halt the recent slide in equities and thus just make the recent selling in stocks appear to be nothing more than a standard correction before possibly moving higher again. A better-than-expected number could deflate the recent bid in gold and silver, and precious metals investors will likely be watching this number very closely.

Emerging markets currencies and the recent data weakness in China will likely keep investors on edge for the time being. Although the emerging markets situation is still under the microscope right now, some of those currencies have been stabilizing and will continue to be monitored closely. Chinese data will also remain in the spotlight, and further signs of slowing could potentially benefit gold and silver prices.

Seasonal demand for silver has remained intact. Physical buying in the metal has also remained fairly consistent at current price levels. Short covering also appears to be part of the recent price action, and could continue to push prices higher in the near-term.

After trending lower for a couple weeks but still within its recent trading range, silver prices have staged what could prove to be an upside breakout. The bulls need to take out the recent swing high at $20.67 in order to attract more fresh buying interest and force more shorts out. The bears are still looking for a meaningful break below the $19 level for more downside potential.