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July 8th Early Week Silver Market Update

A lack of any fundamental inputs is causing gold and silver to decline for the second consecutive day this week. With that said, however, gold and silver are only edging slightly downward and are still in fairly decent positions overall. The big news of the week will come tomorrow in the form of the FOMC's minutes from their June meeting, but most are expecting this to be more of a non-factor than anything else.

In other precious metals-related news, Palladium is trending higher and has reached a peak 13-year high during early trading. Platinum too is trading higher as a result of worries with regard to the global supply and it possibly being significantly reduced during the upcoming weeks and months. In all, this week is taking on the shape of a typical mid-summer week as things are moving slowly and precious metals spot values are, for the most part, not making major moves in either direction.

Investors Ponder the Prospect of Raised Interest Rates

After last week brought with it reports of massive job growth during the month of June, we all knew that it was only a matter of time before investors in the US and around the world began discussing the possibility of interest rates in the US being raised. Despite a plethora of Fed members, including Chair Janet Yellen, recently making it known that interest rates in the United States would remain low for the foreseeable future, investors are convincing themselves otherwise.

If interest rates are risen, this would undoubtedly bode poorly for precious metals as investors would more readily seek out assets that will bring about larger interest payments. Afshin Nabavi, head of trading at MKA SA, put investor expectations for tomorrow's minutes in perspective by saying, "Tomorrow we have the minutes and hopefully we will get a better idea, also based on the economic data, of what U.S. interest rate policy will be in coming months." The Fed's minutes are always an important factor for the marketplace to consider, but are especially important this time around as June played host to a string of upbeat economic data.

The US Dollar has been improving over the last week or so, but has remained mostly unchanged throughout the day today. The same cannot be said about US Stock indexes which have, across the board, traded down today. In fact, the DOW, Nasdaq, and S&P 500 have all recorded losses over the past 5 days, something that is definitely providing support for precious metals.

While gold and silver spot values are trading more or less sideways, Palladium is and has been moving noticeably higher over the past week or more. Used in car's catalytic converters, Palladium moved to a 10+ year high on the back of a report last week indicating that US auto sales performed better in June than they have in any single month for the past 8 years.

Platinum is also doing better as of late thanks to growing concerns with regard to the supply of the metal stemming from South Africa. Striking workers who have been demanding pay increases for a majority of the year have finally gotten their wish, but with major mines in South Africa at a standstill for more than 5 consecutive months, it is easy to see why the market has grown so concerned with regard to whether the physical supply can live up to demand or not.

With two policy-making Fed members expected to make speeches today, and the Fed's most recent minutes due out tomorrow, the next day or so may provide a lot of price movement that otherwise would not have been expected from such a quiet week of trading and economic activity.

Posted in Market Updates

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