OUTSIDE MARKET DEVELOPMENTS: With the US equity market attempting to show some positive action early, the US Dollar showing initial weakness and oil prices higher it would seem like outside market action today is providing some fresh support to gold and silver prices. In fact, despite talk about rising risk appetites and buying fresh interest in the Pound, Canadian, Swiss and Euro, the precious metals markets don’t seem to be that concerned about flight to quality liquidation pressures. The US economic report slate today carries the US Trade and Budget figures and it is possible that expectations for those readings are providing some early support to gold and silver prices. Many metals traders are thought to be watching for a further slide in the June Dollar index below 82.00, while others suggest that a June crude oil trade above the psychological level of $60.00 could be a development that ratchets up inflation expectations in the precious metals markets. In short, a number of outside market forces are potentially nearing critical levels and therefore traders look to take quite a bit of interest in outside market forces.
SILVER MARKET FUNDAMENTALS: The silver market action overnight would seem to suggest that the silver market is set to outperform the gold market in the action today. It would seem like the silver market is getting an additional lift from its physical commodity standing, especially given the strength in copper and energy prices overnight. It is also possible that a modest decline in silver exchange warehouse stocks overnight provided the silver market with a minor lift in the action since the prior session’s close. Some traders might derive some bullish support for silver prices today, off calls for Chinese government support of silver exports, in an apparent effort to assist Chinese lead and zinc smelters. While silver might also be seeing some spillover support from a pattern of weakness in the US Dollar, one also gets the impression that silver is showing greater price correlation with the industrial metals markets than to the US Dollar. With China reporting record April imports of both Iron Ore and Copper, it is possible that the bull camp in silver is indeed trying to play up the idea of rising physical demand for silver or perhaps even the inflation angle.