PM Daily Market Commentary - 9/6/2017

By davefairtex on Thu, Sep 7, 2017 - 12:15am

Gold fell -5.90 to 1339.00 on heavy volume, while silver inched down -0.01 to 17.95 on moderate volume. It was a relatively quiet day – no dramatic moves in currencies or equities – and PM mostly chopped sideways, with gold dropping a bit towards the end of the trading day.

For the bulk of the day, gold moved sideways, but then started to correct a bit before 1pm in New York. Still, the move down wasn't particularly substantial. The candle print today for gold was a bearish engulfing, but the code wasn't all that impressed, with a 33% chance of marking a top. Forecaster dropped -0.26, but still reads a bullish +0.87. As of right now, this appears to be gold just taking a rest after a strong move higher. RSI7 dropped to 76, which is only somewhat overbought.

Comex GC open interest rose +687 contracts.

Rate rise chances (Dec 2017) bounced back to 36%.  Perhaps this was due to an interim agreement to raise the debt ceiling for another 3 months?

Silver chopped sideways too, but avoided gold's dip in the afternoon in New York. Today's candle print was a doji, which the code felt was a bullish continuation. Forecaster dropped -0.22 to read +0.75, which is still quite bullish. Silver too appears to just be taking a rest.  RSI7 fell slightly to 81.

Open interest in COMEX SI contracts rose by +1,125 contracts.

The gold/silver ratio fell -0.29 to 74.60. That's bullish.

The mining shares had a bit more trouble than the metals, with GDX off -1.54% on heavy volume, while GDXJ fell -1.55% on heavy volume also. The GDX print was a swing high, which had a 50% chance of marking a top, while the GDXJ print was a bearish harami that had just a 36% chance of being a high. Both forecasters fell, with GDX down -0.40 to +0.55, while GDXJ forecaster dropped -0.27 to read +0.80. In spite of today's drop, the forecasters for both ETFs remain in a fairly strong uptrend. Today's drop also managed to work off the overbought condition, with GDX/RSI7 now 69, and GDXJ/RSI7 at 72.

The GDXJ:GDX ratio was flat, while the GDX:$GOLD ratio fell. That's bearish.

Platinum fell -0.24%, palladium plunged -1.91%, while copper climbed +0.99%. Palladium followed through from yesterday's bearish candle and printed a two-candle swing high, which was even more bearish: 76% chance of a top. Palladium is now below its 9 EMA, and its forecaster is back at neutral. Platinum remains in its uptrend, as does copper, which made a new closing high of 3.16. Palladium: about to enter a downtrend. Other two: still in uptrends.

USD fell below 92 today for a time, but buyers pulled prices back up by end of day. The buck closed up +0.03 to 92.05. Candle print: a spinning top, which the code thinks has a 57% chance of marking a low here. Forecaster disagreed, dropping -0.10 to read a bearish -0.51.  Buck remains in a downtrend, hovering just above the dangerous round number 92 level.  ECB meeting tomorrow.

Crude continued rising today, up +0.55 to 49.28. The rally stopped just short of the 200 MA. The API report after market hours showed a crude build (2.8m barrels) and a gasoline draw (2.5m barrels). The market didn't react to the report. Crude's candle print: an opening white marubozu, which had a 47% chance of marking a top. Forecaster disagreed, jumping +0.22 to read +0.87, which reflects a strong uptrend for crude. Next stop: round number 50. Crude is not yet overbought – it has some more room to run to the upside. Last week's COT report shows a large number of managed money shorts were added; we could be seeing them squeezed out over the past 3 days.

SPX rallied +7.69 to 2465.54. The candle print was a bullish harami, but the code wasn't impressed; this is probably a bearish continuation – meaning a rally to be sold. Forecaster concurred, dropping -0.17 to read +0.02, which is on the cusp of a breakdown. Energy did extremely well (XLE:+1.63%) while utilities brought up the rear (XLU:-0.46%). Tech, industrials, and financials trailed – this appears to be just a bounce in a correction.

VIX fell -0.60 to 11.63.

TLT fell -0.61%, dropping heavily after yesterday's huge gain. Candle print: bearish harami, which has a 43% chance of marking a top. Forecaster agreed, dropping -0.41 to read +0.14...just barely an uptrend. TLT appears to be struggling to remain in an uptrend. It remains above its 9 EMA, but there remains a fair amount of selling pressure right now.

JNK fell -0.08%, dropping slightly along with TLT. No change in trend. Neutral.

CRB moved up +0.36%, printing a new high, with 4 of 5 groups rising on the day. The leading sector today was energy, which climbed by +0.92%. CRB is approaching its 200 MA. Commodities are on the move back up once again. Unleaded gasoline front month fell about 2%, which suggests that the short term shortage picture is relenting somewhat.

  • Oct: $1.67 [-0.03]

  • Nov: $1.59 [unch]

  • Dec: $1.54 [+0.01]

Today appeared to be a day of rest prior to the ECB meeting scheduled for tomorrow. The announcement will be at 7:45am Eastern. If Draghi isn't careful, a Euro rally (driven by expectations of ECB tapering) will drive the buck clean through 92. Is there anything he can really do, given that he's running low on bonds to buy?  We'll see soon enough.

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1 Comment

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5694
ECB press conf: Euro 120.50 [+1.30]

Whatever Draghi said, the Euro is up more than a full point.  Listening to Draghi talk, it is a bit mind-numbing - trying to extract meaning, well, I just prefer to watch the prices instead.  They make more sense.

In the Q&A section, when asked if they discussed tapering QE, Draghi didn't answer.  The market seemed to take that as a yes.  Then when asked, he fessed up that the QE taper decision will occur in October.  Unless a risk not seen today materializes.

Gold +10 to 1348, silver +0.13 to 18.04.

USD is down -0.70 [-0.76%] to 91.50.  Ouch.  If it doesn't recover by end of day, this could end up being a big deal.

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