Market Overview: Both silver and gold are moving lower in early action today as risk appetite continues to remain strong. Investors are also awaiting the outcome of today’s OPEC meeting at which an agreement on a production cut may potentially be reached. Hopes for a deal have driven crude oil back towards the $50 per barrel level, and a coordinated production cut could potentially keep oil prices more stable. On the other hand, however, if a deal is not reached, it could potentially send oil sharply lower. Some analysts have suggested that $25-$30 per barrel could potentially be seen if no deal is made. This could have a significant impact on global equity markets, and if a deal is reached stocks may move higher along with oil prices.
Key Data Points: MBA Mortgage Applications today showed a small decline in purchase applications while refinancing activity was sharply lower as rates have spiked following the Presidential election earlier this month.
The big story of the day is the latest reading on the ADP Employment Report. ADP reported an increase of 216,000 jobs which was well above consensus estimates of 160,000 jobs.
This much better than expected report could potentially bode well for Friday’s Employment Situation Report, which is expected to show an increase of 170,000 jobs.
Outside Markets: The stronger jobs data today is fueling risk appetite along with hopes for an OPEC deal being reached on oil production. Stocks are higher and have thus far not shown any signs of pulling back since they began moving up after the Presidential election.
Oil is up almost $3 per barrel today, or nearly seven percent as hopes are high for a production cut agreement being reached today.
Bonds and notes are getting hit hard today, as interest rates continue their recent ascent. The dollar index is also moving up, and appears headed for more upside.
The Big Picture: Gold and silver continue to lack any fresh, bullish catalyst that might drive more buying. The markets have seen some solid downside in recent weeks, and you could argue that at this point they have been oversold. Although a bounce higher is seemingly becoming more and more likely, the metals as of right appear quite weak, and it remains unclear if a long-term bottom has been reached yet. A stronger dollar, higher stocks and rising rates are all likely weighing heavily on gold and silver, and may continue to do so if present trends continue.