Market Overview: Both the gold and silver markets are moving slightly lower in early action today as investors digest fresh economic data and await this afternoon’s release of the latest FOMC meeting minutes. The metals may simply be seeing some more profit taking after stalling out a bit in recent sessions. Trade may also potentially be on the quiet side ahead of the Fed meeting minutes and jobs data on Friday.
Key Data Points: Investors got the latest reading on MBA Mortgage Applications this morning which showed a slight rise in new home purchase applications but showed a decline in refinancing activity.
The ADP Employment Report showed a figure of 263,000 jobs-well above consensus estimates of 170,000 jobs. The ADP data could potentially point to a strong but slightly lower non-farm payrolls figure on Friday.
The latest ISM Non-Manufacturing data showed a reading of 55.2. This figure was below consensus estimates of a 57 reading and showed employment growth slowing significantly.
The biggest data point of the day will be this afternoon’s release of the latest FOMC meeting minutes. After the central bank elected to raise the Fed Funds rate by a quarter point last month, investors will be looking for clues as to the timing and pace of further rate hikes, as well as the central bank’s assessment on economic activity.
There had been considerable discussion of the Fed possibly becoming more aggressive with its tightening, and there was discussion of possibly a fourth rate hike being seen in 2017.
The Fed did not, however, change its forecast at its most recent meeting, and as of right now it appears likely that two more hikes will be seen this year.
Outside Markets: Both stocks and the dollar index are moving higher today and may be making the metals a bit less attractive. Bonds are slightly lower in very quiet trade. The dollar index has reclaimed the 100 level, and while it does not appear to be having a major impact on the metals markets, further upside in the greenback could potentially fuel more profit taking and possibly even a significant reversal.
The Big Picture: Stocks have shown some signs of wobbling in recent weeks, but have thus far not shown any real signs of a significant breakdown. The recent dip in equities may simply be bought by investors, and another run at previous highs for the stock market could potentially weigh heavily on gold, silver and other perceived safe haven assets.