PM Daily Market Commentary - 7/18/2017

By davefairtex on Wed, Jul 19, 2017 - 1:13am

Sorry for no post yesterday; I was traveling - one of those long transpacific flights.

Gold rose +8.70 [+0.71%] to 1241.90 on heavy volume, while silver rose +0.18 [+1.12%] to 16.26 on moderate volume. The buck was hammered, dropping -0.54%; much of gold's move was just a currency effect.

Gold made a new high today to 1244.10, and kept most of those gains into the close. Gold's print today was just a long white candle, which the code views as a continuation. Forecaster moved up a big +0.23 to read +0.76, which is quite bullish. Gold has now moved higher on 6 of the last 7 days.

Open interest at COMEX for GC fell -887 contracts.

Rate rise chances (Dec 2017) fell to 43%.

Silver outperformed gold today, making a new high to 16.31. Candle print was a short white candle; kind of surprising that an 0.18 gain is a “short” candle, but I guess the trading range for silver has been wider than that. (“short” candles are defined as candle that are 70% of the average candle size). Short white candle was viewed by the code as a continuation. Forecaster jumped +0.20 to read +0.54, which is pretty bullish. While silver's recent ascent has not been steep, it has gone up 5 of the last 6 days.

Open interest at COMEX for SI rose +3,293 contracts. That feels like a number of new short positions being opened by someone.

The gold/silver ratio fell -0.31 to 76.38. That's bullish.

Miners moved higher, but only because of the gap up at the open. GDX rose +0.76% on light volume, while GDXJ climbed +0.52% on very light volume. For 5 days in a row, miners have printed black candles, indicating selling pressure. GDX printed a short black candle, which the code felt was a continuation. Forecaster inched up +0.06 to a somewhat bullish rating of +0.27. GDX is in no hurry at all to rally right now. Maybe its summer and everyone is off – or maybe nobody cares.

The GDXJ:GDX ratio fell, while the GDX:$GOLD ratio rose. Call it neutral.

Platinum rose +0.14%, palladium fell -0.07%, and copper was flat. No real movement in the other metals today.

The buck was hit hard, dropping -0.51 to 94.35, which is a new low. Buck has fallen from a high of 104 set back in January, dropping -0.01 to 95.47. USD forecaster dropped -0.33 points to a reading of -0.84, which is quite bearish.  Candle print was an opening black marubozu, which the code thinks might mark a low (35%).  Euro made a new high to 115.55, which is as high as its been for several years. Gold in Euros is actually rallying, but not very strongly. This suggests that the move we're seeing in dollars is mostly about currency. That's a bit worrisome if you are hoping to see a stronger move out of the metals.

Crude tried to rally today but largely failed, managing to move up +0.27 to 46.42. Candle print: shooting star, which the code gives a 47% chance of marking the top here. Looks like crude is having trouble with the 50 MA. API report after market close shows a surprise +1.6 million barrel crude inventory build, but at the same time reported a -5.4 million barrel gasoline inventory draw. Crude's forecaster inched higher, up +0.01 to read +0.34; modestly bullish.

SPX rose +1.47 to 2460.61, which looks to be another new all time closing high by a few pennies. The spinning top candle print was neutral. Tech led (XLK:+0.46%) while energy trailed (XLE:-0.47).

VIX rose +0.07 to 9.89. Puts: cheap.

TLT raced higher today, up +0.87%. TLT is now back above all 3 moving averages. Looks like bonds are coming back.

JNK rose +0.13%, and managing to close above its previous high. JNK's lower highs downtrend pattern has been interrupted. That's risk on.

CRB rose +0.57%, closing above its 50 MA. First step on the road to recovery. 4 of 5 groups rose, led by energy. Industrial metals look to be the strongest group.

Those miners continue to give off signals that suggest traders just aren't interested in buying. That, along with gold's rally being largely currency-driven suggests that the current rally may not lead to a very durable gain, in spite of the very bullish COT report in silver.

If you look at gold's move in Euros, it really looks more like a dead cat bounce than anything else.

Technicals still look good for gold and silver right now; I'm just not so happy with gold being mostly a currency trade.

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1 Comment

KugsCheese's picture
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
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William Devane: 

Oh, besides the gold flash crash last night, only $500M paper gold smash.

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