PM End of Week Market Commentary - 7/28/2017

davefairtex
By davefairtex on Sun, Jul 30, 2017 - 12:51am

On Friday gold rose +10.60 [+0.84%] to 1275.60 on heavy volume, while silver climbed +0.18 [+1.09%] to 16.75 on moderately light volume. The buck made a new multi-year closing low to 93.04.

It was another bullish week for PM. While the moves in gold and silver were not all that dramatic, the sector map shows silver leading gold, and the miners leading gold and silver. All elements have moved above the 50 MA. Copper and palladium are doing substantially better than the PM components; copper broke out to a new multi-year high, while palladium is close to its highs also. Rising prices for those two metals suggests economic growth.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Copper $COPPER 5.80% 30.02% rising rising rising rising ema9 on 2017-07-14 2017-07-28
Palladium $PALL 4.36% 25.88% rising rising rising rising ema9 on 2017-07-25 2017-07-28
Senior Miners GDX 2.23% -22.99% rising falling rising falling ma200 on 2017-07-28 2017-07-28
Junior Miners GDXJ 1.51% -30.12% rising falling falling rising ema9 on 2017-07-26 2017-07-28
Silver $SILVER 1.48% -17.17% rising falling falling rising ma50 on 2017-07-28 2017-07-28
Gold $GOLD 1.15% -4.95% rising rising rising rising ma50 on 2017-07-20 2017-07-28
Silver Miners SIL 1.02% -30.25% rising falling falling falling ma50 on 2017-07-28 2017-07-28
Platinum $PLAT 0.04% -17.57% rising falling falling falling ema9 on 2017-07-28 2017-07-28

Gold rose +14.50 [+1.15%] on the week, assisted by an -0.62% fall in the buck (and/or a +0.75% rise in the Euro). The steady drop in the dollar is really providing a boost to gold; the gold/EUR chart looks much less bullish. Gold printed a swing high early in the week, but the rally following the FOMC meeting invalidated the swing high.

Friday's candle print was a long white candle, which the candle code felt was an uptrend continuation. The gold forecaster remains bullish, reading +0.78. Gold's RSI-7 is at 78, which is somewhat overbought. The technical picture – in USD - remains bullish.

The December rate-increase chances rose to 47%.

COMEX GC open interest fell -22,894 contracts this week. It looks as though there was a lot of short-covering that happened this week.

Silver rose +0.25 [+1.48%] on the week, rising somewhat more than gold. Silver closed above the 50 MA just on Friday. Friday's candle print was not a new high, so the code had no assessment about direction; Thursday's print was a shooting star, which remains in play. Silver forecaster closed the week at +0.56, which is a bullish rating. Volume has been steadily declining all during the move in silver. This is bearish.

The gold/silver ratio fell -0.25 to 76.18. That's bullish.

COMEX SI open interest rose by +1,506 contracts.

The miners moved higher, with the majority of the gains coming immediately following the FOMC announcement on Wednesday. The rally on Wednesday saw GDX invalidate a swing high, as well as move above the 200 MA. GDX forecaster closed the week at +0.75, which is a very bullish reading. The junior miners weren't quite as bullish, with the GDXJ forecaster showing a rating of +0.57. Seniors led the juniors this week, which is somewhat bearish.

The GDX:$GOLD ratio rose this week, but the GDXJ:GDX ratio fell.

USD

This week the buck continued dropping, losing -0.58 [-0.62%] to 93.04, touching levels last seen in June 2016. The Euro climbed vs the buck +0.91 [+0.78%] to 117.52. The falling dollar has provided a serious boost to the gold rally.  The Gold/EUR chart shows a relatively shallow-slope rally.  It looks suspiciously like what happened back in May.

US Equities/SPX

SPX fell -0.44 to 2472.10. SPX made a new all time high this week, but sold off somewhat on Thursday and Friday, unwinding the earlier gains. SPX forecaster fell into bearish territory and now has a rating of -0.14.

The equities sector map shows energy in the lead, while sickcare and homebuilders did worst; a huge rally in crude helped energy equities, although they seriously underperformed the rally in crude itself; it currently appears as though the equities do not yet believe in the move higher in crude.

VIX rose +0.93 to 10.29. Puts remain cheap.

Name Chart Chg (W) 52w ch EMA9 MA50 MA200 50/200 Last Crossing last
Gold Miners GDX 2.23% -22.99% rising falling rising falling ma200 on 2017-07-28 2017-07-28
Energy XLE 2.09% -0.34% rising falling falling rising ema9 on 2017-07-25 2017-07-28
REIT RWR 0.62% -8.25% rising rising rising rising ma200 on 2017-07-17 2017-07-28
Cons Staples XLP 0.47% 1.67% rising rising rising falling ma50 on 2017-07-28 2017-07-28
Financials XLF 0.44% 29.49% falling rising rising rising ema9 on 2017-07-27 2017-07-28
Cons Discretionary XLY 0.29% 12.09% rising rising rising rising ma50 on 2017-07-14 2017-07-28
Technology XLK -0.05% 24.11% rising rising rising rising ma50 on 2017-07-12 2017-07-28
Telecom XTL -0.09% 17.10% falling rising rising rising ema9 on 2017-07-28 2017-07-28
Materials XLB -0.36% 12.51% falling rising rising rising ema9 on 2017-07-27 2017-07-28
Utilities XLU -0.47% 2.37% rising rising rising falling ema9 on 2017-07-26 2017-07-28
Industrials XLI -0.55% 17.51% falling rising rising rising ema9 on 2017-07-20 2017-07-28
Homebuilders XHB -0.70% 5.26% falling rising rising falling ema9 on 2017-07-28 2017-07-28
Healthcare XLV -1.27% 6.54% falling rising rising rising ema9 on 2017-07-25 2017-07-28

Gold in Other Currencies

Gold rallied in all currencies this week, with gold in XDR up +10.78.

Rates & Commodities

TLT fell -1.43% this week, with all of the damage happening on Tuesday. On Friday, TLT printed a swing low, which the code felt had a 42% chance of marking the bottom. The TLT forecaster ended the week with a -0.27 rating, which is somewhat bearish. The swing low dovetails with the drop in SPX. If the SPX move continues, bonds probably stage a more serious rally.

JNK rose +0.24% this week, breaking above the previous high set back in May. While JNK faded a bit by end of week, it remains quite near its highs.

CRB jumped up +3.09%, mostly because of a 7% rally in the energy sector. 3 of 5 sectors rose this week; energy, industrial metals, and PM. CRB is closing on its 200 MA. The energy rally has provided a large boost to the commodity complex.

Crude staged a huge rally on the week, rising +4.19 [+9.19%] to 49.79. There were two catalysts that I saw: first was the Saudis suggesting (effectively) that they would return as swing producer, and second was the bullish EIA report that showed a large drop in crude oil inventories. On Friday, crude managed to close above its 200 MA for the first time in two months. Crude forecaster ended the week at +1.11, which is very bullish. The RSI7 for crude is 76, which says that oil is overbought. Candle code felt that the closing white marubozu might be a high: 40% chance. The volume over the past four days has been very heavy. This is a bullish sign during a rally. I'm guessing that round number 50 will provide some resistance.

Physical Supply Indicators

* No SGE data this week.

* The GLD ETF tonnage on hand fell -21.88, with 792 tons in inventory.

* ETF Premium/Discount to NAV; gold closing of 1275.60 and silver closing of 16.75:

 PHYS 10.36 -0.57% to NAV [down]
 PSLV 6.35 +0.10% to NAV [down]
 CEF 12.48 -6.6% to NAV [up]

* Bullion Vault gold (https://www.bullionvault.com/gold_market.do#!/orderboard) showed a discount for gold, and no premium for silver.

* Big bars premiums were: gold [400oz] 1.65% and silver [1000oz] 3.48%.

Futures Positioning/COT

COT report is through July 25th, when gold closed at 1256.10, and silver at 16.47.

This week in gold, the commercials net position fell by 30k contracts; they sold 4k longs, and added 26k shorts. Managed money net position rose by 45k contracts, adding 9k longs and bailing out of 35k shorts. This was a big change in the managed money short position; more than 1/3 of the total short position vanished this week. This tells us that the recent move higher in gold has largely been because of short-covering by managed money.

In silver, the commercial net position fell by 7.6k contracts; commercials added 5k shorts and sold 2.6k longs. This was a small change. Managed money's net position rose by 15.3k contracts, adding 3k longs and closing 12k shorts. This is a medium-sized change in the managed money shorts – we still have several more weeks at this pace before the shorts are all gone.

Gold Manipulation Report

There were no after-hours spikes this week.

Eurozone Status

  • German Elections; October 2017: Merkel's lead is slowly increasing; it is now a 15 point lead.

  • The EU is considering measures that would allow regulators to “temporarily” freeze deposits in struggling banks deemed failing or likely to fail – presumably in reaction to the bank run two months ago that took down Banco Popular. It will be interesting to see what happens the first time this new power is used. https://www.reuters.com/article/us-eu-banks-deposits-idUSKBN1AD1RS

  • Turkey & the migrants: no news.

  • Italian Elections: no progress on a new electoral law in Italy. In national polls, M5S is even with the PD at 27.5%. A combination of FI + LN are polling at 30.2%, and are rising in the polls.

Summary

FOMC was unexpectedly dovish, and that sent the dollar lower, and the metals higher. Miners did especially well, making up somewhat for last week's lackluster performance. Gold in Euros continues to lag. While gold's move this week wasn't entirely a currency effect, gold's uptrend when viewed in Euros looks shallow.

The COT reports show a large amount of short covering in gold, and less short-covering happening in silver. Its clear that this week's move higher was mostly shorts bailing out rather than managed money going long. If we don't see more buying from the gold longs, we only have one more week of short-covering at this pace until we run out of shorts to squeeze.

Gold and silver big bar shortage indicators shows a mixed picture in the West; premiums on big-bar silver remain slightly elevated, while premiums on gold remain normal. GLD tonnage fell again. The falling GLD tonnage is a bit odd; it usually rises when the price of gold is rallying, but right now its going the other way.

Next week we have Non-Mfg ISM on Thursday, and Nonfarm Payrolls on Friday. Both are usually market-moving events.

The big question for me: will the dollar's plunge continue? The daily, weekly, and monthly RSI7 values are all below 30. That's very oversold. So far, however, a reversal pattern has yet to appear. As long as the dollar continues to drop, gold will probably continue moving higher.

Trend-following code says:

Uptrend: gold, silver, copper, natgas, crude.

Downtrend: platinum, treasury bonds, USD.

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16 Comments

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

Sounds like Ronnie is calling for  $17.40 silver before heading back to the $15s...  My own analysis says $16.40 is a possibility for tomorrow,  so I may close out my DSLV position with a small profit (hopefully!) and sit on the sidelines for a couple days to see what is up.

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
Gold flat, Gold stocks up.. worm turning?

SA up 1.7%, MUX up, GDXJ up.. Gold down marginally? 

Jim H's picture
Jim H
Status: Diamond Member (Offline)
Joined: Jun 8 2009
Posts: 2385
Gold flat, Gold stocks up.. worm turning?

SA up 1.7%, MUX up, GDXJ up.. Gold down marginally? 

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
euro rally

I'm concerned (as usual) today's move is just a currency effect.  The EUR/USD is up +0.54% (to 118.14), and gold is off -0.15%.  To me, that's not a good sign.  GDXJ also down -0.15%.

Silver's rally seems to be a bit of an anomaly - perhaps connected to copper's continuing breakout (HG:+0.64%).

If the USD worm ever turns, the shakeout in the PM market could be fairly dramatic.

Of course, I could end up worrying all the way to gold 1300 (and USD 90).

 

Cornelius999's picture
Cornelius999
Status: Gold Member (Offline)
Joined: Oct 17 2008
Posts: 379
Discovery

Here in Europe Discovery Channel started it's new series last night ( 30th) with a good, thought provoking and I thought unbiased programe on gold.  Does it finally mean when a mainstream show does gold well that  we're near a tipping point?

And for Eanno, they mentioned they're doing a programe on the possibility that Adolph Hitler, many Nazis, and their plundered gold could conceivably have escaped to Argentina!  Say what you like but these guys were forward thinkers. For all I know they could calling the shots there at the moment.

Sorry but I can't seem to keep my feet on the ground known as reality.....

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Mini Flash Crashes Today?

Why did Gold mini flash crash 8 times today?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
need a chart

Looking at gold today, I don't see anything that I'd call a flash crash.  From what I can see, gold had a $6 trading range.  Could you mark up an intraday chart and show me what you see as a flash crash?

Eannao's picture
Eannao
Status: Silver Member (Offline)
Joined: Feb 28 2015
Posts: 146
Commercials increasing their Silver Shorts

Dave, commercials have started increasing their silver shorts again. That increases the probability of another drop in silver IMO.

Eannao's picture
Eannao
Status: Silver Member (Offline)
Joined: Feb 28 2015
Posts: 146
Silver Downtrend

Silver is in a downtrend:

 

  • 200d MA is going down
  • Silver price is below the 200d MA
  • There is a succession of 'lower highs' in place

I think we could retest the June lows (around $14.5) before this trend changes

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Re: Need A Chart
davefairtex wrote:

Looking at gold today, I don't see anything that I'd call a flash crash.  From what I can see, gold had a $6 trading range.  Could you mark up an intraday chart and show me what you see as a flash crash?

It was the Yahoo Gold chart.   Looking back today for that chart I can only see one mini flash crash:

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
flash crashes

To identify these things, you really need to use volume bars as well as candlesticks, and you should probably also see what the chart looks like over the longer term (i.e. a 1 hour chart, then a 5 minute chart).  A $2 "flash crash" with a 500-contract volume spike really isn't a flash crash.  A $20 flash crash with a 10k volume spike, on the other hand, is something to take notice of.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Re: Flash Crashes

That's why I called them "Mini Flash Crashes".  On Monday's active chart there were 8 of them.  Water about to boil?

See the relative size of the those big sell orders:

/sites/default/files/users/u_26441/screen_shot_2017-08-01_at_12.37.53_pm.png

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
GC Z7 fri-tues

So here's my trading app's view of "GCZ7" (Dec gold) - it is not showing anything dramatic.  I'm not sure which contract you are viewing - perhaps its a different one.

It is possible if you zoom in, a $2 move can look really exciting, but viewed in a larger context, the only "flash crash" occurred today - and that was a $4 dip.

Yesterday looked pretty boring; just a chop sideways.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Re: GC Z7 Fri-Tues

The Yahoo graph is '17 Dec Gold.  Your graph doesn't show the spikes in sell orders that the one I posted today does.   Is that just an artifact of how data is fed to Yahoo?

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5408
spikes

Hmm, I don't know why yahoo would have different data.  But at least we're looking at the same instrument, so that's good.  Can you turn on candlesticks instead of using a line, and show a 3-day chart so that your big spikes appear in context?

Here's a fun event: look at this evening's silver chart.  I'm showing a huge upside spike at 19:05 - a massive 25 cent (in 5 minutes) spike with a huge 5k contract volume bar.

Looks like some shorts got hosed.  Don't know why.

KugsCheese's picture
KugsCheese
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1447
Re: Spikes

Looks like the sell spikes were revised away except for one:

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