PM Daily Market Commentary - 6/6/2017

By davefairtex on Wed, Jun 7, 2017 - 6:28am

Gold shot up +14.70 to 1296.60 on heavy volume, while silver climbed +0.15 to 17.70 on moderately heavy volume. Gold broke above the long term downtrend line and also moved briefly above the previous high to 1298.80, and kept the vast majority of its gains into the close. This was not about the buck – the breakout was entirely about gold.

Gold's rally started in Asia, and continued steadily throughout the trading day, topping out at 1298.80 around 11:30am in New York. I really like the slow, steady rallies that push prices higher; they seem to end up as much more sustainable over the longer term than the sudden spikes.

The candle print for gold was a confirmed bullish NR7, which the code felt was very bullish. Sometimes an NR7 pattern (which happened yesterday) presage large moves – but we can never be entirely sure which direction they'll head. Gold is right on the cusp of a consequential break above the previous high at 1297.40; a close above 1297.40 would be a very bullish outcome.

Quite possibly, the explosion higher in the miners today was a result of gold breaking above that long term downtrend line I added to the weekly report.

Open interest at COMEX for GC rose +27,232 contracts. That's 84 tons of new paper gold that the commercials printed up right as gold neared 1300.

Rate rise chances (June 2017) is at 96%.

Like gold, silver made a new high today also to 17.75, several hours before gold hit its high. Silver has been lagging gold, and this was quite evident today. Silver's candle print was a long white candle which the code felt was mildly bullish. Silver also managed to close above its 200 MA for the first time in a month. Today's new high cancels out yesterday's bearish doji.

Open interest at COMEX for SI rose 3,904 contracts.

The gold/silver ratio rose +0.19 to 73.25. This supports the safe haven theme.

Miner buyers woke from a long, long slumber today; miners gapped up at the open and rose steadily through until end of day. GDX rose +4.66% on very heavy volume, while GDXJ shot up +6.11% on heavy volume. Senior miners are now above all 3 moving averages, while GDXJ managed to rise above its 50 MA. Junior miners have a long way to go to catch up to the seniors, but they started on that path today. Candle prints were very bullish for both GDX and GDXJ – in the 90%+ range in terms of marking lows.

Platinum rose +0.79%, palladium rose +1.16%, and copper dropped -0.47%. Code felt that copper's hammer candle was somewhat bullish, while palladium and platinum's candles were both neutral. Palladium made yet another new high today, while platinum is languishing, even underperforming silver.

The buck fell -0.18 to 96.39, making a new low but trading in a fairly narrow range. The short black candle was seen as neutral by the candle code. It looks as though the dollar decline will continue. I'm guessing it is an artifact of the political upheaval in the US.

Crude managed to rally strongly today, rising +0.59 to 48.02. The rally in crude started a bit after 11am in the US, and rose sharply until after market close, when the API report, showing a crude inventory draw but a gasoline inventory build, caused crude to lose about 40 cents in about a minute. Ouch. Looks like the market didn't like that gasoline build.  Still, the code felt that crude's long white candle was somewhat bullish. Perhaps oil will stabilize around this level if the EIA report cooperates tomorrow and provides a bullish inventory draw.

SPX fell -6.77 to 2429.33. Energy did best again (XLE:+1.18%), while industrials led the market lower (XLY:-0.86%). Most sectors fell on the day. The candle print was a spinning top, which the code felt was neutral.

VIX rose +0.38 to 10.45.

TLT rebounded after yesterday's plunge, up +0.54% and managing to close back above its 200 MA. TLT made a new high, but could not hold it into the close. Print for the day was a confirmed bullish NR7, which the code felt was quite bullish. Swing high from yesterday is now invalidated. That's a good sign, and its risk off too.

JNK fell -0.13%, moving gently lower. Today's print was a bearish confirmation of yesterday's NR7, which the code felt was just mildly bearish. JNK is hinting at risk off.

CRB rebounded today, rising +0.44% and printing a swing low. 3 of 5 groups rose, led by energy. Might CRB be putting in a more durable low here? That will take longer to discern.

So what do we see? Risk off. SPX and JNK hinting at risk off, along with TLT having a reasonably good rally, together with strong rallies in gold and the miners, with silver bringing up the rear. Dollar fell. To me this collection of capital flows points at political uncertainty in the US causing the majority of the trouble.

The massive increase in open interest for COMEX gold also suggests possible official intervention. Aside from jumping in heavily short, another mechanism I believe they use is pounding silver to affect gold. I am seeing some signs of that early this morning.  However, if the flight to safety is coming from the US, the real test as to whether or not we will see a buy-the-dip move will come once the US market opens.

To add to the fun on this coming Thursday, the ECB will be meeting and announcing (probably) no change to its money printing policy. The ECB announced today (a day ahead of its meeting) that they were going to cut the inflation outlook.

And now, there are hints that AG Sessions is threatening to resign.

Comey, UK Elections, and an ECB meeting.  And a potential vacuum at DOJ.  If they do manage to remove Trump, his base will be very upset.

Which is probably gold-positive.

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PeakGold's picture
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78

Here is an interesting chart. Silver is also at important resistance and I'm like 60% bearish 40% bullish....

PeakGold's picture
Status: Bronze Member (Offline)
Joined: Jun 3 2017
Posts: 78
I think I've wrapped my head

I think I've wrapped my head around it. Gold needs to be at out of it's pennant to $1,335, at the upper resistance in my gold charts,  in order for silver to be at $18.20, at the top of it's pennant. It took me too long to wrap my head around that.... I guess that's why I keep posting because it helps to bring clarity to ideas. It will be interesting to see what the rest of the week brings because maybe gold does go up. If not this week, then maybe in a couple weeks?...

I guess $1,335 gold and $18.20 silver are the key price points that I will be looking for.

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 384
Silver RSI

10 day Relative Strength Indicator for silver hit 70 yesterday. That would suggest that it's overbought so I would expect a pullback in the next few days (might even be a significant one depending on whether the Conservative party secure a majority in the UK election).

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5738
maybe bearish

Peak, Luke-

Bearish scenario may be on deck.  Code didn't like gold's bearish engulfing too much.  Miners remain positive - imagine that.  I'm looking at a possible double top at 1297.


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