Both silver and gold are seeing some heavy selling pressure today as stocks slide, crude oil declines and the dollar index rallies.
Both silver and gold could potentially be showing some signs of vulnerability as overall risk appetite remains fairly solid. While some risk aversion has been seen in light of the terrorist attacks in Brussels, markets have not seen the carpet pulled out from underneath them thus far.
While the recent attacks could potentially drive safe haven buying in gold and silver, the precious metals are likely being affected today by recent commentary from some Fed officials.
While the Fed sounded more dovish at its recent meeting, some commentary this week seems to point to a more hawkish tone regarding interest rates. Some central bank officials seem to be calling for further rate hikes sooner rather than later, while other areas of the world continue with quantitative easing measures and negative interest rates. This divergence in monetary policy could be considered bullish for the dollar, and the dollar is likely seeing some buying today based on the notion of further rate hikes.
St. Louis Fed President James Bullard today discussed his view on rates and suggested that the central bank should hike rates at its next meeting. Many signs have pointed to continuing improvement in the economy, and another strong jobs report of other key piece of data could potentially compel the Fed to act.
Silver and gold may be seeing some exaggerated effects today as sell stops are likely triggered and some long liquidation might be taking place ahead of the Easter weekend.
While the selloff in silver today is moderate, the recent uptrend is still intact. Further downside from current levels could, however, point to a change in trend and potentially lower prices to come. The move lower may be a good test for the silver bulls, who could step in to buy the dip or elect to wait and see just how far the market drops before bargain hunting.
While the dollar index has been trending lower recently, any changes in interest rate expectations could potentially drive the dollar and a rally could be seen if the Fed
appears more aggressive in its plans regarding interest rates. A stronger dollar could potentially weigh on silver and gold.
The silver market may also simply be falling today as gold gets sold off. If gold stabilizes above the $1200 level, silver may find some fresh buying interest.