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OUTSIDE MARKET DEVELOPMENTS: With the Dollar a touch higher this morning, it is not surprising to see a bit of early divergence between gold and silver prices. With global equity markets not giving off definitive direction overnight and UK retail sales data somewhat soft overnight, physical commodities in general seem to be facing some minor macro economic adversity. With the US initial claims figures expected to forge a minimal rise later this morning, the fear of slowing looks to remain in the headlines in a number of markets. However, as the US data flow progresses today, it is possible that the outlook for the US might improve slightly, as the trade generally expects to see a positive leaders figure and an improvement in the Philly Fed readings. While the US Treasury Secretary is also scheduled to testify on financial reform this morning, there doesn’t seem to be expectations of a definitive link between the House testimony today and precious metals price action.
SILVER MARKET FUNDAMENTALS: Like the gold market, September silver did manage an upside thrust in the early morning action today, but the market was unable to sustain that pulse up move. It would seem as if lackluster sentiment toward the economy is undermining silver and a host of physical commodity markets this week, especially with headlines this week seemingly tamping down inflationary prospects. It also seems as if early strength in the US Dollar today served to deflate the initial attempt to rally in silver overnight. In the end, silver seems to be concerned that further evidence of slowing, or even ongoing weakness in equity prices will serve to downgrade the environment for silver. It also seems as if the final spin from the US monthly inflation report cycle has tamped down near term expectations for inflation and that in turn might be discouraging some silver bulls. With an ongoing pattern of fresh record holdings of silver held in trust, one might have expected the press to be carrying more stories about strong residual investment demand for silver, but instead the pattern of inflows toward silver derivatives is being given little attention.
