PM Daily Market Commentary - 1/24/2016

By davefairtex on Wed, Jan 25, 2017 - 4:45am


Gold fell -6.50 to 1211.30 on moderate volume, and silver fell -0.14 to 17.11 on moderate volume also. The buck stopped falling and rebounded today; predictably, this caused problems for gold and silver.

Gold rallied initially at the open in Asia making a new high to 1223.00, but then gold started dropping as the buck put in a low. By end of day, the dollar rebound had driven gold to print a “long black” candle, which looked to me like a more-bearish “dark cloud cover.” Candle code did not rate it as a danger – only a 10% chance of marking a high, but I think it looks more worrisome than that.

Open interest at COMEX for GC rose by 4,410 contracts.

Rate rise chances (May 2017) rose to 35%.

Silver followed the same track as gold, rallying early and then trading sideways through end of day. Unlike gold, silver did not make a new high, printing a “short white” candle which was also an NR7, which the candle code says is slightly bearish (25% chance of a top). [NR7 = “smallest candle in the last 7 days”]. In spite of not making a new high, silver slightly outperformed gold, which caused the gold/silver ratio to drop by -0.13 to 70.58.

Mining shares rallied initially, but then came back down to earth as gold and silver fell, with GDX up +0.08% on moderate volume, while GDXJ dropped -1.00% on moderate volume also. Candle print for GDX was a “high wave” which candle code says is mildly bearish, with a 16% chance of marking a top.  Today looked like a failed rally - but at least the miners ended up outperforming gold, so that's a plus.

Platinum rose +1.41%, palladium climbed +1.47%, while copper shot up +2.36%. Platinum made a new high today, copper looks like it is preparing to break above 2.71, and palladium is also right at its high too.  These were some big moves in the other metals - a surprising outcome on a day when the buck also moved higher.

USD rose +0.21 to 100.30, -0.56 to 100.09, but not before making a new low to 99.84. The rebound in the buck helped drive gold and silver prices lower. Will this result in a reversal for the dollar? Candle print was just a “short white” candle, which the candle code says only has a 16% chance of marking a low. That's not all that exciting. Buck remains well below its 9 EMA and in a solid downtrend. We don't have a reversal in the buck yet.

Crude rose +0.11 to 52.94. Crude rallied intraday but the afternoon rally in the buck seemed to pull crude back down to earth. Candle print was a doji, which turns out to be more bullish than bearish, according to the candle code. The API report at end of day showed a 3 million barrel build for oil, and that caused price to drop about 15 cents in response.  EIA's petroleum status report is due out tomorrow at 10:30 – if the past is any guide, this should set the tone for the rest of the week.

SPX climbed +14.87 to 2280.07, setting a new all time high for SPX.  Break out the party hats!  The leading sector was materials (XLB:+2.58%) with sickcare trailing (XLV:-0.69%). I'm thinking the large moves higher in copper and palladium are the reason behind the big breakout in XLB.  VIX fell -0.70 to 11.07.

TLT fell -0.69%; it remains above its 50 MA, but a rallying stock market is not good for bonds - or gold.

JNK rose +0.22%, which is a new closing high for this cycle.  JNK remains in a strong uptrend, and is now signaling risk on.

CRB rose +0.26%; only 2 of 5 groups rose, led by a big move higher in industrial metals. CRB remains in an uptrend.

Gold fell more than the dollar rose, which is hinting at trouble for the yellow metal. The gold:Euro chart is starting to roll over, and the drop today took gold-in-euros to just a penny above its 9 EMA. The rally in SPX to new highs is also bad for gold; a breakout in stocks and a return to risk-on will cause money to rotate out of bonds and PM.  While the senior miners outperformed gold itself, the steadily dropping GDXJ:GDX ratio is bearish and also suggests risk off for PM.

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1 Comment

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5686
gold in Euros

Gold in euros has - well, it has cratered, through the 9 EMA and down to the 50.  Miners are looking at a swing high too; GDX off -2.41%.

Even with the buck down a bit, gold in USD is off -15.20.  Commercials seem to be working silver over too - a nasty high volume down spike at 03:54.  Silver off -0.31.

I think the SPX breakout is sucking money out of bonds and PM.

Be careful out there.


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