Silver prices are moving higher this morning along with gold as the metal reclaims the psychologically important $20 level. The metals appear to be moving higher on some short-covering and bargain hunting after recent losses.
This morning, the ADP employment report showed an increase of 191,000 jobs. Consensus estimates were looking for a gain of 193,000 jobs. In addition, the month of February was revised upwards to 178,000 jobs. While the ADP data and the non-farm payrolls data do not always “jive,” this could potentially point to a higher number in Friday’s jobs report. Currently, consensus estimates for non-farm payrolls is an increase of 206,000 jobs with the unemployment rate ticking slightly lower to 6.6%. This will clearly be the biggest economic report of the week, and could drive the stock market on another leg higher into new all-time highs.
The ECB will be holding its monthly meeting tomorrow. The European PPI dropped according to recent reports and is further demonstrating the deflationary risks currently faced by the region. Although no action is expected from the ECB tomorrow, investors will be paying close attention to President Mario Draghi’s comments at the post meeting press conference. These comments could give investors an indication of any potential stimulus actions to be taken by the central bank in the near future.
The situation in Ukraine appears to be somewhat calm for the time being, and the precious metals markets do not seem to be paying much attention. This situation will continue to be watched very closely by investors, but for now it appears that diplomacy may prevail and any further escalation may potentially be avoided.
Silver and the precious metals complex appear to be falling victim to the notion of higher interest rates and a strengthening economy. Fed Chairwoman Janet Yellen has seemingly given some mixed signals in recent weeks. In some instances, the Fed has sounded significantly less dovish than expected while in other instances the Fed has reiterated its commitment to keeping rates low. At this point, one could certainly argue that the jobs market is likely the key factor in keeping rates low much longer.
Silver prices are trending lower, and have fallen back into their previous trading range. The bears are in firm control right now, but the downside momentum appears to be stalling a bit. It is likely that silver prices won’t make any real significant moves before the non-farm payrolls data on Friday. For now, silver prices are the highest level in the last several days. To really get the bulls excited again, however, silver prices may need to break above the trading range again at the $20.50 level.