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OUTSIDE MARKET DEVELOPMENTS: While the Dollar is somewhat weaker in the early action today, the currency markets seem to be in somewhat of a narrow trading range in the early going today and therefore they may not offer up much direction to the gold and silver trade today. With a number of international markets closed due to the May Day holiday, the overnight direction in prices might be somewhat misleading. However, with global equity prices at least initially showing more positive action, both gold and silver players might be fearful of more long liquidation by the flight to quality crowd again today. The US scheduled report slate today is pretty active early in the session, with Michigan sentiment readings, the ISM manufacturing readings and US Factory orders all due out. The trade initially expects two of the three US reports to come in with positive readings on the economy and prior to this week that would have been cause to lift gold and silver prices. However, this week the gold and silver trade seemed to think that better US numbers were cause to extract further safe haven premium from both gold and silver prices.
SILVER MARKET FUNDAMENTALS: The July silver contract looks to start the US Friday session off in relative proximity to the prior session’s lows and that would seem to favor the bear camp in the early action. Like gold, the silver market also seems to have been weighed down this week by a broad based liquidation wave that was seemingly fostered by declining anxiety levels. Not surprisingly, the silver market didn’t seem to be lifted by news of potential labor problems in Mexico and the market this morning also doesn’t seem to be garnering much support from overnight news, that Mexican silver output in fell for the month of February. In fact, Mexican February silver output fell by almost 60% versus year ago readings, but that news is at least partially countervailed by news that silver production from the Buenaventura mine in Peru actually rose. However, the silver market recently hasn’t paid that much attention to physical supply and demand side readings. In short, the ebb and flow of flight to quality sentiment seems to remain the dominating force in the silver marketplace.
