Both silver and gold are seeing some solid buying interest in early trade today. Stocks are seeing some slight selling pressure this morning following yesterday’s gains, and the dollar index is also moderately lower while crude oil moves higher.
The weaker dollar index is likely a primary factor in higher silver, gold and oil this morning. The greenback has been in a steep downtrend and recently traded below previous key support. The dollar came bouncing back, however, and has seen a decent rally in the last several sessions. While the dollar saw a false breakdown, another move to those recent lows could potentially drive more selling in the currency and a fresh leg lower in the index may be seen.
Dollar weakness would likely continue to boost buying interest in gold, silver and other commodities. While gold and silver have seen a slight pullback from their recent highs, the bulls appear to be in control and a run back to those recent highs could potentially be in store.
The stock market remains a potential barrier to higher gold and silver prices. While stocks have been choppy in recent action, the market remains not far from previous all time highs. Stronger equities may potentially weigh on silver and gold prices if other fresh bullish inputs are absent.
It should be noted, however, that silver and gold have both exhibited some solid strength recently in spite of higher stocks which could potentially be indicative of underlying strength. The silver market appears to have put in a long-term bottom at this point, and may possibly remain a buyer’s market until proven otherwise.
The primary drivers for silver in the near future will likely be the Fed and its plans regarding interest rates, the dollar index and overall risk appetite or aversion. As interest rates are likely to remain low for some time, the silver and gold bulls may not be deterred by the notion of rising rates in the near future, and the dollar index may potentially see ongoing pressure as a result.
Of course, economic activity will also play a key role as investors continue to question the relative strength or weakness of the global economy. While the U.S. continues to show further signs of improvement, other areas of the world continue to have economic difficulties that may keep a lid on global growth for an extended period of time.