Silver prices are moving lower this morning as investors await the release of the latest FOMC meeting minutes this afternoon. The U.S. dollar index is moving higher once again while crude oil prices are flat after being lower this morning.
This week is a fairly busy week from a data perspective. Thus far, markets have gotten the latest readings on Empire State Manufacturing , PPI and housing starts. Empire State Manufacturing showed a pick up in manufacturing. The producer price index showed an uptick in consumer inflation while housing starts showed a decline. Consumer inflation excluding food and energy jumped .4 percent in October compared to no change in September. Overall, however, inflation remains sluggish and is still running below desired levels. The housing data came in weaker and simply shows the ongoing oscillations within the housing market.
Markets will still get to digest the latest readings on CPI, weekly jobless claims, PMI Manufacturing Index, The Philly Fed Survey, Kansas City Manufacturing and more. The biggest data point of the week, however, will likely be today’s FOMC minutes.
Now that the Fed has put an end to its QE program, markets will be looking for additional guidance on interest rates as well as the central bank’s outlook and assessment on economic activity. While no major departures are expected from the Fed’s commentary and guidance, the minutes always have the potential to be market moving. Some of the selling being seen in silver and gold this morning may be nothing more than position squaring and profit taking before the FOMC minutes. Some feel that the Fed will sound optimistic in its commentary and will appear more hawkish.
The situation in Ukraine appears to be heating up once again. The Ukrainian Government has frozen budget payments to Eastern rebel-held territories. It would seem that perhaps the Ukrainian Government is preparing to escalate military action in the area. While the precious metals markets have thus far not shown much reaction to the ongoing Russian/Ukrainian conflict, the potential for further escalation may potentially lend silver and gold some support.
Silver prices rebounded on Friday and made a key reversal on the daily chart. This reversal could likely be attributed to short covering as well as some fresh buyers entering the market. The question now becomes whether or not silver can sustain any type of rally. It would seem that if the silver market cannot hold the $16 per ounce level, then a retest of the recent lows may be in store. The $16.50 and $17 per ounce areas remain upside resistance. The silver market may see somewhat limited fresh buying interest unless it is able to maintain trade above the $17 level. Higher stocks, a stronger dollar and weaker crude oil prices will likely continue to be some of the main drivers of silver and precious metals.