Silver prices have moved slightly higher today in relatively quiet trade. The silver market has made four consecutive higher lows since dipping last week, and this could be a potential sign of dip buying taking place.
The uptrend since the December lows is still intact, and if the silver bulls can stage some upside movement this week it is possible that additional buying interest may surface. Silver has thus far held support, and last week’s highs around the $18.50 area remain overhead resistance.
This morning, markets got the latest data on the ADP jobs report. This report showed slower hiring with 213,000 jobs added while consensus estimates were looking for 220,000 jobs added. This ADP number is the lowest since September, and could potentially point to a disappointing number this Friday with the release of the non-farm payrolls data for January.
Friday’s non-farm payrolls data will likely be the economic highlight of the week. Consensus estimates are looking for 230,000 jobs added with the unemployment rate steady at 5.6 percent. Should the number be inline with expectations, stocks could continue their recent upside. On the other hand, should the number disappoint, it could potentially give stock investors another reason to take some risk off the table.
Oil prices saw a sharp rally yesterday which was likely a large contributor to the rally in stocks, however, oil prices are giving that rally back today-and then some-making investors a bit more cautious.
The dollar index continues to hold close to its recent highs, and the uptrend in the greenback is still intact. While a stronger dollar may potentially inhibit buying interest in silver and gold, these metals have held up reasonably well thus far, and this may be a sign of underlying market strength.
Silver and gold will continue to take their cues from equity strength and investor sentiment as well as any central bank action or commentary. The Fed still appears to be on track for raising interest rates in June or September, although there remains some skepticism about this given the lack of inflation and ongoing economic struggles in Europe and elsewhere.
While silver appears to have discounted a rate hike already, should the Fed signal that it may decide to hold off on tightening it could potentially give precious metals a further boost.
Greece will also remain at the forefront of headlines as the new anti-austerity Syriza party attempts to renegotiate the country’s debts. While rhetoric from their leaders has calmed down a bit over the last week or so, it is possible that silver and gold may find some support on risk aversion until more clarity is seen.