PM Daily Market Commentary - 6/15/2017

By davefairtex on Fri, Jun 16, 2017 - 4:37am

Gold fell -7.00 [-0.55%] to 1255.50 on heavy volume, while silver fell -0.16 to 16.72 on very heavy volume. Both metals followed through from yesterday's big reversal. That said, the dollar's strong rally [+0.57%] meant that gold's fall was just a currency effect.

It was a busy news day today:

The Eurogroup met, and approved the distribution of the latest round of Greek bailout money. Did the IMF go along? It pretended to. It said a whole bunch of really nice things about how it approves in principle, welcomes further specification, says its a major step forward, but...

... Lagarde agreed in Luxembourg that the Washington-based IMF would join Greece’s massive bailout, but said any payouts depended on the eurozone coming up with a full debt relief plan.

How does one join a bailout, but withhold payments? Basically, the IMF held firm. EU will have to pay the money, with the IMF being on board only in a cosmetic, “we're right there with you” (but from 1,000 miles away) sense of the word. Can kicked by the EU once more, Greece with no debt relief. They promise to talk about Greek debt relief in 2018.  Really, they promise.

BOE held rates steady, however 3 of the BOE voting members voted to raise them, since the CPI number in the UK is 2.9%. But for now, at least, no change.

Industrial production was flat, with autos and business equipment production falling. Utilities and mining (probably shale) rose. It was not a good report.

Gold's move lower today took it to a new low of 1252.70, before managing to bounce back slightly before end of day. Candle print: a confirmed shooting star, which the code felt was bearish. Today probably does not mark a low for gold.

Open interest at COMEX for GC fell -11,336 contracts. I suspect that is the commercials busily ringing the cash register.

Rate rise chances (Dec 2017) rose to 42%.

Silver plunged also, making a new low to 16.62 before managing to bounce back somewhat. Candle was a spinning top, which the code felt was somewhat bullish. Certainly the pace of silver's decline has slowed, but I suspect silver's fate is in the hands of the currency markets. A continued dollar rally will (probably) not be kind to silver.

Open interest at COMEX for SI fell -3,637 contracts.

The gold/silver ratio rose +0.27 to 75.09. That's bearish..

Miners gapped down at the open, tried rallying, but mostly failed. GDX dropped -0.54% on heavy volume, while GDXJ dropped -0.40% on light volume. The print for GDX today was a spinning top (in other circumstances, a shooting star), which the code felt was relatively bullish. It doesn't look bullish to me, it looks all set for a move lower tomorrow. Since GDXJ did not make a new low, the code gave no opinion on where it goes next. I'm guessing that the miners will follow gold.

Platinum fell -1.52%, palladium rose +0.87%, and copper moved up just +0.14%. Platinum's bearish engulfing looks somewhat bearish, palladium is neutral (but quite near its highs), while copper's bullish harami is indeed bullish. Palladium: great, platinum: terrible, copper: right in the middle.

The buck rallied strongly, up +0.55 [+0.57%] to 97.16, confirming the high wave candle from yesterday, following through from yesterday's bullish move following the FOMC announcement, and also printing a swing low. That's bullish. The buck is back above its 9 EMA, and appears to have decisively changed trend. Today's move was mostly due to the Euro's plunge: down -0.64% to 111.46. The Yen also fell too: down a big -1.17% on Kuroda's statements that the BOJ isn't considering ending QE. Both the Euro and the Yen both printed swing highs today.

Crude continued falling, down -0.41 to 44.41, closing at or near the lows of the day. In spite of the unpleasant close, the code feels the short black candle is bullish, with a 60% chance of marking a low. This new rev I made to the candle code is coming up with all sorts of surprising calls. It will be interesting to see if this one plays out. RSI-7 for crude is 19, which means crude is well within oversold territory.

SPX fell -5.46 to 2432.46. Industrials did best (XLI:+0.60%) along with utilities (XLU:+0.57%) while materials (XLB:-0.88%) and energy (XLE:-0.76%) led the market lower. The losses in SPX took place overnight in the futures markets, but SPX rallied back during the US session, closing down, but near its day high. SPX is right at its 9 EMA. The long white candle print was neutral.

VIX rose +0.26 to 10.90. VIX is steadily moving higher.

After the big breakout yesterday, TLT sold off, down -0.20%, but still quite close to its recent high.

JNK fell -0.24%, printing a small swing high on the day. Code didn't feel it was particularly bearish, however JNK is now starting to hint at risk off.

CRB fell -0.14%, making yet another new low. 3 of 5 groups fell, led lower by PM. No low yet for CRB.

After all the fuss this week, we end up with the focus being on currencies.  Dollar appears to have moved into an uptrend, the Euro and the Yen, into downtrends.  If this turns into a substantial move, this will probably end up being a difficult time for gold.

At the same time, bonds are doing very well, and two important economic reports (retail sales, and industrial production) have both turned in near-recessionary numbers.  If other economic reports start to support this thesis, this could help put a floor on any dollar-driven decline - especially if the equity markets start to sell off in response.  So far they haven't, but things like this are all good right up until they're not.

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1 Comment

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

By the end of next week we should know what direction precious metals are going over the next year or so. If bullish, I'll be looking for a bit of a drop below $16.60, with a turnaround by Wednesday and a weekly close at $16.60 or higher. If bearish, looking for explosive moves to the downside...

Also, interesting forecast by Ronnie Fattal using wave pattern analysis... 

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