Silver prices are slightly lower in early trade on Wednesday. Investors are awaiting the release of the latest FOMC meeting minutes later this afternoon. Trading in silver as well as several other asset classes may remain subdued until the release.
Today’s FOMC minutes will likely be closely scrutinized by markets following last Friday’s weaker than expected non-farm payrolls data. There has been much debate in recent months as to the timing of the first rate hike by the Fed, and last week’s jobs data will likely widen that debate. While a June or September rate hike seemed to be the likely scenario, the large miss on the jobs report has many thinking twice. There is now chatter of the central bank holding off until next year before beginning the tightening cycle.
Fed official William Dudley spoke earlier this week and his comments seemed to soothe investor nerves. Mr. Dudley stated that he believes that the economy will speed up following a first quarter slowdown that he blamed partly on the weather. He also discussed the effects of lower energy prices on the overall economy. His commentary seemed to leave room for doubt with regards to the Fed’s plans and the likelihood of a June rate hike.
Silver and other precious metals have been closely watching stocks and the dollar index. The greenback has been looking a bit tired of late, and the possibility of a near-term top exists. Stocks, on the other hand, have been moving sideways for the most part and are likely awaiting more clarity on the potential for the first rate hike before breaking one way or the other.
Silver prices have been consolidating in recent trade following the move higher a few weeks back. The market has been making higher lows which may be considered bullish, but has also thus far not been able to maintain trade above the $17 per ounce level.
Silver, like stocks, may be biding its time until more clarity is seen from the Fed. In addition, as talks between Greece and the EU continue, the clock keeps on ticking. Thus far it does not appear that any significant progress has been made. As the bailout extension gets closer to expiration investors and global markets may get significantly more nervous. Those potential nerves could potentially drive precious metals higher while driving stocks lower.
Silver appears to be possibly coiling up for a sizable move. The question is – in what direction?