Market Overview: The gold and silver markets are essentially flat this morning as investors await this afternoon’s release of the Fed’s decision on rates. There are numerous other central banks holding similar meetings in the near-future, and the world is slowly shifting towards normalizing monetary policy. Even with significant data set for release this morning, markets are likely going to trade relatively sideways heading into the Fed announcement.
Key Data Points: The latest reading on MBA Mortgage Applications showed a rise in both new home purchasing activity as well as refinancing. This could potentially be due to a more hawkish-sounding Fed, and people scrambling to lock in lower rates now.
The latest reading on the Consumer Price Index showed prices moving slightly ahead. The headline figure showed a month-over-month rise of .1 percent, in line with estimates. The coer reading also registered a month-over-month inline with estimates of .2 percent.
The latest reading on the Empire State Manufacturing Survey showed strong activity in the region with a reading of 16.4. New orders as well as unfilled orders saw a sharp rise.
The Housing market Index is set for release later this morning.
This afternoon, the Fed will release its decision following its recent two day meeting on monetary policy. It is widely expected that the central bank will raise the Fed Funds rate by a quarter point at the meeting’s conclusion. Markets will likely be more interested at this point in any commentary the central bank issues regarding the dot-plot and path of rates moving forward. Perhaps the biggest question on investors’ minds right now is if the Fed could actually hike more than three times this year.
Outside Markets: Stocks are moving slightly higher in early trade while the dollar index trades slightly lower. Bonds and notes are higher this morning as well, likely seeing some short covering ahead of the Fed. Crude oil is higher in early action but remains below the $50 per barrel level.
The Big Picture: Today is really all about the Fed and the dot-plot. A faster pace of rate hikes could potentially spook investors, and it remains unclear how markets will react if the Fed seems even more hawkish than it has in recent weeks.
The March rate hike seemingly was not discounted in the gold and silver markets until recently, and that was potentially the catalyst for the selling seen in recent weeks.
Although the metals could sell off further today, they could also potentially see buyers come in once more is known about the Fed’s plans and assessment of the economy.