Precious metals are mixed this morning as silver moves slightly lower while gold moves moderately higher. Stocks are getting clobbered as crude oil is flat and the dollar index is lower.
The World Bank today cut its forecasts for economic growth this year and next. Forecasts for 2015 were reduced from 3.4 percent to 3 percent. The bank cited ongoing difficulties in both the Euro zone and Japan as well as some emerging markets for the lowered outlook. While it seems that the U.S. and U.K. economies are continuing on the road to improvement, the slew of other problems around the world makes for a very mixed bag in terms of global growth.
Copper prices have hit their lowest levels since 2009 on the reduced outlook for global growth as well as the Bank’s comments in which it stated that the world economy is too reliant on the U.S.
The reduced economic outlook could potentially be one of the reasons that there is a divergence being seen between gold and silver today. While gold is primarily utilized as an investment vehicle, silver can be used not only as an investment vehicle but also in many areas of industry. In fact, silver prices and demand trends can be largely attributed to the white metal’s numerous uses. Because of this, silver may stand to benefit not only as demand for precious metals investments rises, but also as economic conditions improve.
Retail sales data this morning was a disappointment falling .9 percent and data for October and November was revised lower. While this is only adding to investor angst this morning, there is more data coming before the week is out for investors to contemplate. This afternoon, the Fed will release its Beige Book which, given the World Bank’s growth forecast cut, may garner even more attention than usual. Tomorrow and Friday will see the release of the latest inflation data in PPI and CPI. In addition, investors will see the latest data on consumer sentiment, weekly jobless claims, and manufacturing data.
Silver still appears to be in the process of building a base. The metal has essentially traded sideways since November, and while trending slightly higher in recent weeks, it has yet to make a convincing upside breakout. The top of the recent range in the $17.50 area is within striking distance and a break above this level could fuel further buying. Silver has shown multiple signs of a potential bottom, and it is quite possible that an upside breakout could materialize in the near future.