Market Overview: The gold and silver markets are seeing a slight divergence in early trade today, with gold prices moving slightly lower while silver prices move slightly higher. Markets may be somewhat subdued this morning ahead of some key pieces of U.S. economic data. Although not much has changed in recent days following the latest FOMC meeting, fresh worries over China have resurfaced and investors may once again pay close attention to the data stream coming out of the world’s second largest economy. Overall, gold appears to be in somewhat of a holding pattern, although the ongoing lack of any fresh bullish inputs may invite further selling into the market.
Key Data Points: Investors will be getting the latest readings on PPI, Retail Sales and Consumer Sentiment. Both the retail sales data as well as PPI could potentially be market-moving and could possibly also provide further clues about the likelihood of a December interest rate hike from the Fed. There are also several Fed officials speaking today in various engagements.
Although investors will continue to watch the data stream closely, it would seem for now that odds of a December hike are growing. That being said, it would likely have to take some significant disappointments for the central bank to hold off on the next hike until next year.
Outside Markets: Stocks are moving higher again this morning, and although some selling has been seen in recent days, the market has not yet shown signs of a real breakdown. Perhaps the biggest story for the precious metals complex has been the strength seen in the dollar index. The greenback is trading at multi-month highs currently and appears poised for further gains.
Strength in the dollar is likely being fueled by interest rate expectations as well as the ongoing weakness being seen in the Great British Pound.
Crude oil is still hovering just above the $50 per barrel level and could see further strength if hopes for a production cut or freeze rise further.
The Big Picture: Other than a blip on the radar from China this week, the precious metals complex has been lacking any fresh bullish news that could help stabilize prices. Gold remains on the defensive from a technical standpoint as well, and further downside may be seen before more bargain hunters step in to buy. There does appear to be a large degree of complacency in the markets right now, however, and that complacency can become costly. If worries over China begin to rise again or if strong volatility is seen in Chinese markets, risk aversion could potentially set in and provide some support to gold, silver and other precious metals.