PM Daily Market Commentary - 8/1/2016

davefairtex
By davefairtex on Tue, Aug 2, 2016 - 8:56am

Gold rose +2.20 to 1355.30 on very light volume, and silver rose +0.11 to 20.50 on moderate volume.  On a day with falling commodities and a rising dollar, gold and silver managed to eek out some small gains, which is a reasonably positive outcome.

Gold traded mostly sideways today, printing an innocuous short white candle on some very light volume.  This should tell you that not much happened.  Uptrend remains in place.  Resistance is at the previous high of 1377.50.

Gold open interest increased by +4,821 contracts today.

Silver rallied a bit more strongly than gold early in Asia trading, making a new high, but slowly sold off for the reminder of the day, down 20 cents off the high.  Candle print was a spinning top, only a 8-17% chance of marking the top.  Uptrend remains intact with silver also.  Silver continues to perform fairly well, especially considering the drop in both copper and oil today.

The miners dropped at the open, but then the dip-buyers stepped in (miners did open down 1%, after all) and price rose slowly but steadily into the close.  GDX was up +1.11% on moderately light volume, while GDXJ rose +1.72% on moderate volume.  Mining share uptrend continues - all systems go - higher prices probably ahead, in spite of the relatively lighter volume on the breakout.  Gold goes up, miners go up even faster.

Platinum rose +1.10% making a new high, palladium climbed +0.92%, also a new high, while copper declined -0.99%, moving back below its 9 EMA.   Copper is looking a bit weaker.

The USD rose +0.26, managing to recover a only small part of the massive losses that happened last Friday.  Buck remains in a downtrend.  On the chart this looks a bit like a dead cat bounce.  A falling dollar is positive for gold - and may actually help commodities stop their relentless recent plunge.

WTIC dropped -1.30 [-3.14%] to 40.08, making another new low for oil.  Crude appeared to find some support at the round number 40, but the candle print was just a "long black candle" which suggests we probably continue moving lower tomorrow.  Today's move took crude through 200 MA support.  I've started seeing some bearish oil articles come out ("oil has moved into a bear market!"), which suggests to me that - perhaps - a low might be near.  Whenever I read "bad news" about a particular market in the media I instinctively start looking more closely at buying.  I just assume the media ("Financial Entertainment TV") is being used by Wall Street to encourage retail to bail out at or near the lows.

SPX fell -2.76 to 2170.84, making a new high but unable to keep the gains into the close.  SPX printed a relatively boring spinning top candle, which gives us no directional clues.  Energy equities were hit really hard (XLE:-3.29%) on double normal volume - it is earnings season, and many of the oil majors are reporting lower than expected earnings, and that's finally starting to take a toll on energy equity prices.  But so far SPX continues to chop sideways largely within a trading range. VIX rose +0.57 to 12.44.

TLT fell -1.26%, dropping below its 9 EMA.  I'm not sure what that drop is about.  Its a big move.  Risk off.

JNK fell hard, dropping -1.14% and printed a nasty-looking black marubozu.  Looks like JNK is following those energy stocks lower.  That's a clear sign of risk off.

CRB dropped a big -1.55%, pulled lower mostly by energy prices.  CRB didn't quite make a new low today, but it was relatively close to doing so, closing just below its 200 MA.

In spite of the commodity downtrend, money continues to flow into the PM complex.  We are in a longer term PM uptrend, the rest of the world seems to have figured out that the other hidey-holes are overpriced (you really want to be paying the Japanese government for the luxury of owning Yen?), central banks are out of ammo, and there are still lots of shoes left to drop.  It looks like 2010-2011 all over again, but this time the driver is not inflation, its bail-ins and negative rates.  Unless there is a massive deflationary accident, I am not sure what can derail this PM train.  Perhaps an outbreak of prosperity?  I don't see one of those on the horizon.

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