Market Overview: Silver and gold are both seeing strong buying today as bullish outside markets and short covering are featured. These precious metals may be seeing some renewed buying interest on some downbeat economic data as well. Silver and gold are both higher today as stocks continue recent gains in what may be an encouraging sign for the bulls.
Key Data Points: While global equities were mostly lower overnight, U.S. stocks are moving higher today even as Chinese trade data disappointed and the World Bank revised its forecast for world growth to 2.4 percent.
MBA Mortgage Applications this morning showed a strong rise last week, with the composite index up 9.3 percent. The housing market, while not stellar, continues to show signs of improvement that can likely be attributed to low interest rates for mortgages.
The data for this week is on the lighter side, and investors will look forward to tomorrow’s weekly jobless claims data and Friday’s consumer sentiment report.
Following the recent significant miss in non-farm payrolls, investors may pay very close attention to Weekly Jobless Claims. Consensus estimates are looking for a reading of 270,000.
Outside Markets: The dollar index is losing ground today and may be driving some buying in silver and gold. The index saw a steep decline recently in the aftermath of the disappointing jobs report and could potentially be headed back to key support last tested in early May. A break below that level could potentially fuel a fresh leg lower in the greenback and could at the same time act as a significant catalyst for higher silver and gold prices.
Stocks continue to move higher as investor appetite for risk remains high and as the likelihood of a June or July rate hike appears to have decreased significantly.
Oil is trading above the $50 per barrel mark, and appears to be very encouraging for equity investors. Higher oil may also be considered bullish for precious metals.
The Big Picture: While silver and gold are seeing a good bounce higher since last Friday’s labor report, the metals’ ability to make fresh highs remains in question.
Markets may continue to take their cues from the Fed, and with ongoing uncertainty surrounding the central bank’s plans regarding interest rates, upside in silver and gold could be limited. On the other hand, if these metals are able to return to recent highs and beyond, a fresh leg higher could potentially be in store as the pace of any further hikes is likely to remain slow and incremental.