PM Daily Market Commentary - 5/15/2017

By davefairtex on Tue, May 16, 2017 - 6:01am


Gold rose +2.30 to 1230.50 on moderate volume, while silver climbed +0.16 to 16.62 on moderately heavy volume. Both metals rallied hard until just after 9am in New York, and then steadily sold off for the remainder of the day.   I have no idea what the triggering event was, but gold, silver, palladium, platinum and crude all topped out at roughly the same time.

Gold managed to make a new high today to 1237.40, but could not hang onto the gains through the close.  Still in spite of gold's mostly-failed rally, gold ended up printing a swing low today. Gold's candle print was a bearish-looking shooting star, but the candle code found the print to be neutral. This means the slow move higher in gold continues, although gold still has not been able to close above its 9 EMA.

Open interest at COMEX for GC rose by +7,981 contracts.

Rate rise chances (June 2017) rose to 79%.

Silver rallied very strongly today, making a new high to 16.81, but the rally didn't hold, with silver losing 20 cents into the close. Still, silver did manage to cling to 16 cents of the gain, printing a spinning top candle which the code felt was more bullish than bearish. This probably isn't a high. Silver was able to close above its 9 EMA today, which is a positive sign. Silver's uptrend remains in place.

Open interest at COMEX for SI rose +4,060 contracts.

The gold/silver ratio fell -0.56 to 74.04. A dropping gold/silver ratio is positive for PM.

Miners gapped up at the open, and then sold off into the afternoon, when buyers finally showed up that pushed prices back up into the close. Perhaps traders were taking profits after the almost-10% move off the lows over the past 7 days. GDX ended up +0.35% on moderate volume, while GDXJ climbed +0.68% on moderately light volume. GDX printed an opening black marubozu, which the code found to be somewhat bearish, while GDXJ printed a spinning top, which the code thought was bullish. It appeared that the rebound in GDXJ was a bit stronger, which is probably the reason for the difference in rating.

The GDX:$GOLD ratio improved slightly, as did the GDXJ:GDX ratio. The juniors aren't taking off the way they normally do during a PM rally, but neither are they lagging.

Platinum rallied +0.88%, palladium fell -1.22%, while copper climbed +0.34%. Copper's print was a confirmed bullish NR7, which the code felt was quite bullish. The code thought platinum's failed rally looked somewhat bearish (37%), as did palladium's spinning top (35%).

The buck continued dropping after last week's swing high, losing -0.34 to 98.69, and is now more convincingly though its 200 MA. Candle print was just a long black candle, which the code felt was bearish. The new downtrend for the buck remains in place. Gold-in-Euros is actually not looking all that healthy; gold in Euros lost -0.20% today, telling us that gold's move in USD was only due to a currency effect.

Crude broke sharply higher today, rising +1.04 to 49.02; it actually did a lot better, rallying through the 200 MA at one point stopping short of the $50 mark, but was unable to hold on to the other 80 cents of gains through the close. The reason for the rally: a joint announcement by both Russia and Saudi Arabia that they support an extension of the OPEC supply cuts for the next 9 months.  As if they had a choice.  Had they not done so, oil probably would have plunged (perhaps) to $40, which would have been a hit of maybe $80 million dollars per day for each country.  Candle print was an opening white marubozu, which the code felt was bullish. Tomorrow after market close we have the API report, followed by the EIA report on Wednesday morning. The bullish COT report for crude underpins everything.

SPX finally broke through round number 2400, climbing +11.42 to 2402.32, making a new all time closing high. The confirmed bullish NR7 candle was seen by the code as very bullish. SPX is back above its 9 EMA. The sector map shows today's move was led by energy (XLE:+0.87%) and materials (XLB:+0.78%), with cyclicals trailing (XLY:+0.02%).

VIX actually rose, +0.02 to 10.42.

TLT fell -0.27%, dropping down to support at the 50 MA. TLT doesn't generally like it when the equity market rallies.

JNK moved up +0.24%, marking a new multi-month high, signaling risk on. Oil is rallying, SPX is moving higher – happy days for junk.

CRB rallied +0.58%, moving up for the 4th straight day. 3 of 5 groups moved higher, led by energy.

Once a trend is in place, it tends to continue moving in that same direction until something unpleasant happens. So far, all the prints I see range from somewhat bearish to somewhat bullish. That's good; until I see something unpleasant, it means we probably continue moving higher.

The 4-day-old commodity rally seems to be helping; the commodity complex and PM often move together.  Not always, but often.

The only issue is the possible breakout of SPX to new highs. If it starts to become a strong move, that might cause trouble for PM.

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