Silver prices moved slightly higher today as the Fed indicated it is in no real hurry to begin raising interest rates. The silver bulls remain on the defensive, however, following yesterday’s volatility and losses.
Today, the FOMC minutes seemed to indicate that the Fed is conflicted over the timing of the first rate hike. While the central bank wants to stay ahead of the curve, it expressed concern over numerous economic conditions such as lingering weakness in the labor market and ongoing struggles overseas. In addition, the Fed also cited excessively low inflation as a concern and the central bank once again reiterated that it would be patient with regards to changes in policy.
The release of the minutes have stirred up debate over the timing of the first rate hike, with some believing that a June hike is now off the table. There is even discussion now of the first hike coming not at the September meeting but sometime after. The central bank’s willingness to hold off could send stocks on another leg higher into new all time high territory, although the fact that they are concerned about some of these conditions does raise some red flags.
While the FOMC minutes are likely the biggest piece of data for the week, investors will still get more to chew on. Weekly jobless claims tomorrow as well as the Philly Fed survey and leading indicators could potentially move markets.
In addition to more data, markets will be closely monitoring any developments between Greece and the EU. While hope remains that a last minute deal may be reached, the two sides seem to be far apart on the terms of altering the current bailout conditions. The current bailout term is set to expire on February 28th, and without an extension or other form of financing, Greece will run out of money shortly thereafter.
The ongoing situation in Greece may keep a lid on risk appetite, although should a deal be reached it could potentially send stocks higher while weighing on perceived safe haven assets such as silver and gold. The dollar continues to trade near recent highs, and another leg higher in the greenback may also weigh on precious metals.
Silver has been trending lower since reaching the $18.50 per ounce level late last month. Looking at recent price action, the silver market could potentially be headed even lower and could possibly see trade down to the $15.50 level before finding more buying interest.