PM Daily Market Commentary - 4/6/2017

davefairtex
By davefairtex on Fri, Apr 7, 2017 - 2:10am

 

As of this writing, with gold trading in the Asia session, gold is up +12.30 to 1265.60, silver is up +0.17 to 18.42, and crude shot up +0.90 to 52.60. Both metals started moving higher starting around 21:10, with crude launching 10 minutes later, driven higher by the US missile attack on Syria.

While news is driving prices right now, I believe its still a useful exercise to see where prices were headed prior to the missile attack. If and when the crisis recedes, prices should return to their pre-crisis levels.

During today's trading session, gold fell -4.00 to 1253.60 on light volume, while silver fell -0.05 to 18.27 on moderate volume. Gold slowly sold off for most of the day, while silver dropped in Asia and London, and rallied when the US market opened. Not much happened in PM, while the dollar rallied slightly. It looked as though the market was in a holding pattern ahead of the market-moving Nonfarm Payrolls report due out tomorrow at 08:30.

Candle print for gold was today was a long black candle, which the code felt was very slightly bearish. Gold remains above its 9 EMA, and just below the 200 MA. Resistance is at 1262/the 200 MA.

Open interest at COMEX for GC rose +5,570 contracts.

Rate rise chances (June 2017) rose 5% to 71%.

Silver sold off down to its 9 EMA but then bounced back, printing a high wave candle on the day. Candle code felt this candle was somewhat bearish. Silver remains above all 3 moving averages, with overhead resistance up at 18.50.

The gold/silver ratio fell -0.03 to 68.62.

Miners mostly went nowhere today, with GDX up +0.13% on light volume, while GDXJ dropped -0.51% on light volume also. GDX printed a spinning top which was neither bullish nor bearish. GDX is inching higher, creeping slowly above its 50 MA. Its a very slow-motion breakout.

Platinum fell -0.36%, palladium dropped -0.33%, and copper moved down -0.67%. Platinum is still struggling, palladium is just below the recent high, while copper is trying (and so far failing) to close above its 50 MA.

The buck edged higher, rising +0.12 to 100.55, trying and failing to move above the 50 MA. The long white candle print was slightly bullish. The buck needs a close above the 50 to signal a more enthusiastic move higher; the Euro does not look particularly strong right now, so my guess is that the buck will eventually manage to break higher.

Crude came back after yesterday's plunge, rallying +0.93 to 51.86. There was no apparent precipitating event, price was just bid up slowly but steadily throughout the trading day. Yesterday's oil smash driven by the mildly bearish EIA report has been totally unwound. Candle print is a white marubozu, which the code finds to be somewhat bullish. I'd rate it stronger than that – seeing the steady bid under oil, there is clearly a lot of money that is waiting to buy any dips that occur in crude.

Yesterday it turned out I was overly worried; today I'm (possibly too) bullish; the candle code seems a whole lot calmer than me, which was probably the right response.

SPX moved slightly higher, closing up +4.54 to 2357.49. Really not much happened. The candle print was a spinning top, which the code found to be slightly bullish. Energy led (XLE:+0.80%) while utilities brought up the rear (XLU:-0.25%). SPX closed right at its 9 EMA.

VIX fell -0.50 to 12.39.

TLT moved mostly sideways, down -0.15% but remaining above both the 50 and the 9 EMA. TLT is still hinting at risk off, in my opinion.

JNK rose +0.14%, edging back above its own 9 EMA. JNK appears neutral right now.

CRB rose +0.34%; livestock did best, followed by energy. 3 of 5 groups rallied. CRB continues to creep higher, and is approaching its 200 MA.

Yesterday's warning shot from the FOMC minutes about plans for reducing the Fed's balance sheet in 2017 did not have any follow-through today. While bank stocks still look relatively weak, they do not appear ready to give it up just yet.

How will the Syrian strike affect prices longer term? Gold is cleanly up and through its 1262 resistance line, while silver's jump stopped right at 18.50 resistance. Crude is through its 50 MA. If this missile strike is one-and-done, I'd guess that prices probably retreat back to their starting points. The moves might not even survive to the end of day Friday.  We'll have to see how it goes.

Nonfarm Payrolls is tomorrow at 08:30. Currently rate-rise chances (June 2017) are above 70%.

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10 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 378
NFP

NFP with a YUGE miss.  Gold and silver up bigly.  Bet gold closes in the $1250s or lower, lol!

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
NFP - big miss - 98k

For those still watching economic data, Nonfarm Payrolls was a big miss.  This helped gold and silver, momentarily.  Buck is still sorting out where it wants to go.

Rate rise chances dropped to 66%.

lambertad's picture
lambertad
Status: Silver Member (Online)
Joined: Aug 31 2013
Posts: 184
Syria vs Non-farm payrolls

I suspect very few will be talking about NFP today, but instead focusing on Syria. 

It didn't take long for Trump to learn the lesson not to fight the TPTB and the neocons. I can only wonder if Flynn was still the national security advisor if Trump would have launched those tomahawks into Syria. I guess we'll never know. 

The goods news for Russia is that they have their S400 system in country, which, probably tracked the missiles the entire way. Now they get to examine that data and fine tune the system even more.

I suspect gold and silver are not only responding to NFP but also Syria. I saw it was up huge last night before I went to bed and the only news I heard about was Syria at that time. 

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1227
News-driven market?

So much for that phase. I don't think it holds today.

1. Idiotic missile strike in Syria.

2. Russian frigate into the Mediterranean and currently  bearing down on US equivalents. One beating a hasty retreat to rearm..

3. NFP a complete disaster.

4. Terrorist attack in Sweden.

5. Gorsuch confirmed after the "nuclear" option invoked in a divided Congress.

6. Atlanta Fed slashes Q1 GDP to 0.6%.

Markets flat! Just another day in the office I guess...

Mark Cochrane's picture
Mark Cochrane
Status: Diamond Member (Offline)
Joined: May 24 2011
Posts: 1227
My mistake

My mistake, looking back at the markets...

Everything is Awesome!

How foolish of me to doubt...

vadim_75's picture
vadim_75
Status: Bronze Member (Offline)
Joined: Oct 18 2015
Posts: 48
CR, bravo!  What's

CR, bravo! 

What's interesting that when gold just came back where it started today, silver wiped out two-weeks gain!

 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
news driven markets

Mark-

I'm with you on this one.  I see news driving gold, silver, the buck, crude, and to some extent bonds.  I have no idea what drives the equity market anymore.

I would have thought a bad payrolls number would have done something.  A rally.  A sell-off.  Something.

But no.

Question: if GDP goes negative, do we imagine the Fed will continue to raise rates?

We aren't that far away at 0.6.

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 378
vadim_75 wrote: CR,
vadim_75 wrote:

CR, bravo! 

What's interesting that when gold just came back where it started today, silver wiped out two-weeks gain!

 

Yeah man, you could see this coming a mile away.  I bet commercials were licking their chops this morning.

vadim_75's picture
vadim_75
Status: Bronze Member (Offline)
Joined: Oct 18 2015
Posts: 48
yes, sure.

It seems nowadays to win you just have to pick the most counterintuitive move in every given instrument!

BTW, i don't remember miners have been so disconnected from PMs. It looks like nobody would like to touch them any more no matter bulls or bears. 

 

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 378
Range

It seems like everything from stocks to bonds to PMs to oil to currency is strangely range-bound.  We aren't getting any sustained moves in any direction.

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