Silver prices are slightly lower on Wednesday morning as stocks and the dollar index see some selling pressure as well.
After starting off the week on the right foot, silver has not seen much interest either way. In fact, silver attempted to take out last week’s highs on Monday, but was met with willing sellers. The market seems intent on staying range bound for the time being. The lack of any bullish behavior today with the dollar index being lower is indicative of the general malaise facing the silver market currently.
This morning, investors got the latest ADP employment report data. The data was a miss, as the number came in at 169,000 jobs versus estimates of 205,000 jobs. The employment data is likely coming under even more scrutiny than usual, as investors are hoping for a rebound from last month’s release of non-farm payrolls data for March.
The non-farm payrolls data for April will be released this Friday and could potentially play a key role in any decision by the fed to raise rates in the near future. Consensus estimates for April are looking for an increase of 220,000 jobs with the unemployment rate ticking slightly lower to 5.4 percent.
Should this data meet or exceed expectations, it could pave the way for a rate hike by the fed in June or September. On the other hand, if another large miss is seen, it may force the fed to remain on hold for some time-perhaps even until next year.
The uncertainty surrounding the central bank and interest rates is likely the primary reason that gold and silver have not been able to sustain any upside rallies or any downside moves. At some point, however, that will change but it may not be until more clarity is provided.
Greece and its ongoing negotiations with creditors and the EU remain a market focus. Greece made a debt payment yesterday, however, another payment is due in a matter of days. Should Greece be unable to come up with this payment, it could potentially cause risk aversion to set in with selling in global equity markets. Precious metals, along with other perceived safe haven assets such as treasuries, could stand to benefit.
The data stream in recent weeks has shown some signs of underlying weakness which may work in silver’s favor. In addition, the dollar bulls appear to be continuing to fade which also may potentially provide a boost to silver prices.
Should the dollar continue to weaken, and should the data show further signs of weakness, silver may stand to benefit. On the other hand, if silver cannot put together a more sustainable upside move in light of these factors, it may be indicative of underlying weakness in the metal, with the possibility of another leg lower in prices. For now, silver seems to be in a state of equilibrium. That can, however, change quickly.