PM Daily Market Commentary - 8/3/2017

By davefairtex on Fri, Aug 4, 2017 - 1:02am

Gold rose +1.80 to 1274.40 on moderate volume, while silver rose +0.07 to 16.64 on moderate volume also. Apart from a $10 5-minute plunge in gold early in the Asia session, not much happened today in either currencies or in PM.

Gold was hit for a $10 loss at 7pm Eastern (8am JST), with 8500 contracts trading hands over a 5 minute period. During the spike, gold made a new low to 1262.90. It looked as though a fairly large number of longs were stopped out by the spike. It took until about 7am Eastern before the buyers showed up to pull prices back up to even, and by end of day gold actually closed in the green. Gold printed a high wave candle, which the code felt was a continuation; it does not mark a low. Gold's forecaster didn't change; it remains at +0.15.  Gold is still above all 3 moving averages.

Open interest at COMEX for GC rose 3,181 contracts.

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

Silver made a new low today also, hitting 16.42 before the buyers showed up around 7am Eastern. Silver suffered several downspikes, but they were not nearly as strong as the assault on gold; the 7pm eastern downspike only hit silver for 10 cents and 1000 contracts. I had the sense that it was gold that took the hit, while silver just followed along. Silver printed a spinning top candle, which the code felt was a continuation – today's candle did not mark a low. The silver forecaster rose +0.06 to a still-bearish -0.11.

Open interest at COMEX for SI fell -1,195 contracts.

The gold/silver ratio fell -0.24 to 76.56. That's bullish.

Miners rallied early, but then sold off for the remainder of the day. GDX fell -0.31% on light volume, while GDXJ dropped -0.39% on very light volume. GDX printed a high wave, which the code felt was a continuation; GDXJ was a spinning top, which was also a continuation. GDX forecaster rose +0.09 moving back up into bullish territory. It looks as though the miners are chopping sideways now; the forecaster does an especially bad job when the markets aren't trending strongly one way or the other. Usually its just best to watch when that starts happening.

The GDXJ:GDX ratio fell slightly, as did the GDX:$GOLD ratio. That's bearish.

Platinum jumped +1.80%, palladium fell -1.08%, and copper dropped -0.16%. Palladium printed a swing high, which has a 51% chance of marking a top. Forecaster for palladium has also turned bearish, dropping -0.55 in just one day. Platinum's massive (and surprising) rally took it cleanly through the 200 MA and to a new multi-month closing high. Copper's candle print was neutral, but the copper forecaster has turned bearish. This might be a high for industrial metals overall.

The buck was little changed, rising +0.01 to 92.63. The buck had a very narrow trading range, and the candle code had no opinion on direction. Dollar forecaster rose a big +0.19 to read -0.38; that's still bearish, but it is a definite improvement. Yesterday's bullish-looking spinning top is still in play. Might the buck be putting in a low here?  (How many times have I said that?). We need to wait for a swing low.  Even then, its not a sure thing.

Crude fell -0.68 to 48.93, rallying in Asia and London, but then falling in the afternoon in New York. Candle print was just a long black candle, which was neutral, but the crude forecaster plunged -0.54, dropping to a now-bearish -0.25. That's bad news for crude. We might just have a top.

SPX fell -5.41 to 2472.16. The modest move down was led by energy (XLE:-1.40%), while industrials (XLI:+0.50%) did best. While crude didn't drop all that much, energy equities were hit fairly hard; there is a fair amount of selling pressure in energy equities at the moment. My sense is that there is not a lot of confidence that the oil market is ready to recover.

VIX rose +0.15 to 10.44.

TLT shot higher, up +1.03%; bonds are now above all 3 moving averages and have moved into a strong uptrend. The white marubozu candle is a continuation; the forecaster moved up +0.33 to read a very bullish +0.81. I'm not sure what the bond rally is all about, bu the move looked quite strong today. This could be a risk off signal from TLT.

JNK plunged -0.24%, the opening black marubozu candle looking like a continuation. This marks the second significant drop in the last 4 days. JNK is saying risk off.

CRB fell -0.73%; all 5 sectors fell today, led by agriculture, which dropped -1.03%. Commodities printed a swing high a few days ago, but they have yet to meaningfully correct.

Gold did reasonably well today, as did silver, but the miners continue to look weak. The buck may be putting in a low (although I've said that a few times – and so far, no low). That said – the bond market rally and the drop in JNK may be signaling a risk-off change in trend for equities. If that happens, gold could see a bid as money rotates out of equities.

Added to that, there are all these spike assaults; yesterday it was silver, and today it was gold. What do they mean? I don't know. Maybe some larger player is trying to encourage a trend change. If so, it didn't pan out for them. That's mildly positive for PM.

My concern, as always, is a dollar rally. Even a dead cat bounce in the dreadfully oversold buck might cause a relatively serious drop in gold and silver. That's why I'm watching from the sidelines.

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davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5736
Nonfarm Payrolls: +209k

Strong Nonfarm Payrolls report today sent the Euro lower, which dragged both gold and silver lower along with it.  Average Hourly Earnings, perhaps the most important number, jumped +0.3% m/m, an annualized rate of 3.6%.  Fed wants to see wage inflation, and there does appear to be some of that happening in this report.

This will increase the likelihood that the Fed will kick off balance sheet reductions at its next meeting.

Rate increase chances (Dec 2017) jumped to 47%.

KugsCheese's picture
Status: Diamond Member (Offline)
Joined: Jan 2 2010
Posts: 1469
Re: Nonfarm Payrolls: +209k

54K full-time jobs lost.   Part-time America continues!  

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