PM Daily Market Commentary - 1/3/2018

davefairtex
By davefairtex on Thu, Jan 4, 2018 - 8:21am

Gold fell -4.60 [-0.35%] to 1314.50 on heavy volume, while silver dropped -0.05 [-0.29%] to 17.17 on moderately heavy volume.  A relatively strong dollar rally [+0.35%] did hurt the metals to some degree, but mostly today's move appeared to be just selling pressure in the PM space - with some of it driven by the FOMC minutes release at 2pm.

Gold made a new high to 1323 very early in Asia, but then sold off – chopping mostly sideways until the FOMC minutes were released at 2pm. At that point, the sellers unloaded on gold, driving it down $8 in 15 minutes on some heavy volume. Gold bounced back, but the bounce faded into the close. Today's print was a spinning top/bearish harami, which had a 51% chance of marking the high. Forecaster dropped -0.27 to +0.20; that still leaves gold in an uptrend.  On the chart, it doesn't look all that bad.

COMEX GC open interest rose by +13,182 contracts today. That's 41 tons of of new paper gold.

Rate rise chances (March 2018) is at 68%, up 12% today. Gold generally doesn't like increased chances of a rate hike.

Silver followed gold's track for the most part. Although the dip in Asia was larger, silver managed to bounce back and make a new high to 17.28 immediately before the FOMC minutes release. After the release, silver was hit for a 15 cent loss over 15 minutes, and the bounce back was fairly feeble. Silver printed a spinning top candle, which had a 31% chance of marking the top. Forecaster plunged -0.22 to +0.14, which leaves silver in an uptrend.  It felt to me as though silver was doing better before the FOMC minutes release, and then did worse afterwards.

COMEX SI open interest rose +67 contracts today. It doesn't seem as though there was a massive short assault on silver today.

The gold/silver ratio fell -0.04 to 76.56. That's neutral.

The miners sold off in the morning, and then chopped sideways until the minutes release at 2pm, whereupon they plunged but then bounced right back up again. GDX fell -1.05% on heavy volume, while GDXJ dropped -1.71% on very heavy volume. GDX printed a bearish harami (57% chance of a bearish reversal) as did GDXJ (32% reversal chance). XAU forecaster fell -0.23 to +0.37; XAU remains in an uptrend. Effectively, all of the losses in the miners came just after the open. That's still bearish, but it isn't directly related to the minutes release - for the most part, traders bought the minutes-release dip.

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

Platinum rallied +1.33%, palladium fell -0.81%, while copper fell -0.50%. Platinum managed to clear its previous high – it is curious that it did not suffer the way gold and silver did today. I'd say that's bullish overall for PM.  Copper has fallen for 3 days in a row, and printed a swing high today. Copper's forecaster remains in an uptrend, but it is fading rapidly (down -0.11 to +0.07).

As mentioned, the buck rallied +0.32 [+0.35%] to 91.87. Candle print was just a long white candle, which was neutral. Forecaster jumped +0.20 to -0.62, which is still a strong downtrend. Is this the low for the buck? The FOMC minutes were interpreted as being somewhat more hawkish than expected; that's how I read the increase in the rate rise chances. However, most of the dollar gain came long before the minutes were released, so I'm not sure how much of the rally was simply due to anticipation, or maybe just ringing the cash register prior to the event. The Euro printed a swing high today.

Crude rose +1.55 [+2.57%] to 61.92. Crude rose steadily, starting from about 530 am through to the close in New York. There wasn't any one triggering item that I saw – prices just steadily moved higher. After market close, the API report looked perhaps a bit bearish (crude -4.99m, gasoline +1.87, distillates +4.27) but the market didn't seem to care. Perhaps it was all about Iranian protests. Candle print was a strong line (bullish continuation) while the forecaster jumped +0.60 to +0.57, which is a buy signal. I'm not sure I'd actually buy it though, with RSI-7=88. Volume was very heavy.

SPX rose 17.25 [+0.64] to 2713.06, continuing its new year rally with another new all time high. The opening white marubozu was a bullish continuation, and the forecaster rose +0.09 to +0.90. Energy led (XLE:+1.50%) while utilities did worst (XLU:-0.79%). It was another fairly broad-based rally day for SPX.

VIX fell -0.62 to 9.15.

TLT rose +0.48%, printing a bullish harami which was actually neutral. Forecaster dropped -0.05 to -0.64.  TY rose +0.09%, and its forecaster rose +0.04 to -0.30. In spite of today's rally, bonds remain in a downtrend.  Bonds did not seem much affected by the minutes release.  I suspect they are primarily driven by supply concerns - a debt-funded tax cut, plus $30 billion per month in balance sheet normalization.

JNK shot up +0.49%, which is a large move higher for JNK. The strong line candle was bullish, and the forecaster issued a buy signal, rising +0.54 to +0.51. I'm guessing this has to do with the strong rally in oil, perhaps? Or maybe its just the general risk on sense that equities are giving off.  It wasn't about the Fed at all.

CRB rose +0.33%; 3 of 5 sectors rose, led by energy. Industrial metals may be putting in a top here, but the rest of the complex continues to move higher.

Might this be the near term top for PM? There are no sell signals yet, but some candle patterns look somewhat unpleasant -  especially gold and GDX. If the buck has put in a low, then the answer is probably yes.

But as I said before, the dollar rally was not triggered by the FOMC minutes release. While the rate rise chances for March did increase significantly, that increase did not drive the dollar move.  So we'll just have to wait and see where the buck goes next.

For now at least, the PM trend remains up.

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9 Comments

jtietz79's picture
jtietz79
Status: Member (Offline)
Joined: Sep 10 2015
Posts: 9
Gold

It seems like every dip in gold is getting bought. It dipped and recovered after FOMC. Now it dipped and recovered after the ADP even though it beat expectations. Short squeeze?

Atreat's picture
Atreat
Status: Bronze Member (Offline)
Joined: Dec 4 2011
Posts: 33
Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 374
Turn-around

Nice little turn-around in gold and silver today.  We'll see how they finish.  Got to be getting close to the top of the rally pretty soon.  Armstrong mentioned that gold closed the year well and he has a private blog post talking about it potentially being ready to take off.  I can't see it, but I assume it's positive.

Michael Oliver thinks if gold has a weekly or monthly close a bit above $1350, it's gone.

Rickards has been bullish forever.  I like Rickards, but he's a permabull.  I understand his point of view, and I share much of it.  But I kind of get tired of hearing that gold and silver are going to the moon and they remain mired in a range for years.  At some point, people begin to look foolish.  I mean, it's not a hard call to say eventually gold will go up.  A dummy could make that call.  The truth is, nobody really knows much of how anything will act in the near to medium term, outside of technical analysis, which changes daily or hourly.

The only real action one can take (unless you're day trading and charting all day) is to assess the risk and invest accordingly.  It's smart to own some gold and silver, if you can.  Other than that, I don't know much else for sure.

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
I got the Call!

Or rather, the text...

Would I lend my brother-in-law £10,000 so that he could invest in digital currencies.

Dave, what do your charts tell me I should do? :)

Cold Rain, I hear what you're saying; 10 day RSI above 70 in XAG/GBP, XAG/JPY and XAG/EUR. I'm waiting for things to calm down again before going back in.

All the best,

Luke

Adam Taggart's picture
Adam Taggart
Status: Peak Prosperity Co-founder (Offline)
Joined: May 26 2009
Posts: 3134
Luke, You May Have Just Called The Top

Luke --

You may have just captured the sign signalling the top of this madness.

Sure...give him the £10,000. What could possibly go wrong?....

:)

cheers,

A

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5779
I suggest...

Luke,

I suggest that you send him  £10.000 and later claim you must have misread the whole comma vs dot thingy.

For fun though, ask him which ones and why.  Specifically, which technologies he likes and what core problem they are addressing.  Should be good for some fumbling?

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Chris

Chris,

Some of it was for Bitcoin (I assume he has an app that allows him to buy fractions of Bitcoin given the price). He also mentioned Ripple and Onegram. Apparently Onegram is a blockchain backed by gold.

Cheers,

Luke

cmartenson's picture
cmartenson
Status: Diamond Member (Offline)
Joined: Jun 7 2007
Posts: 5779
Luke...
Luke Moffat wrote:

Chris,

Some of it was for Bitcoin (I assume he has an app that allows him to buy fractions of Bitcoin given the price). He also mentioned Ripple and Onegram. Apparently Onegram is a blockchain backed by gold.

Cheers,

Luke

Ripple is IMO (which was handed to me by Mark Rees) a gigantic fraud waiting to blow up.  Actually, by the time I talked with Mark last night I had already read a pretty damning indictment of Ripple a few weeks back:

In terms of interbank payments, many people mention Ripple as a promising way to transfer money between banks.

Over the last 30 days it processed two billion dollars (as of this writing) worth of interbank and interpersonal transactions — about 40 seconds’ worth of volume on the SWIFT interbank network — after three years of being available to banks to trade 90% of the world’s high-volume currencies.

This is like the proportion of US GDP comprised by toothpick sales.

Why haven’t banks preferred this new technology? The answer is that setting up a Ripple Gateway isn’t actually much different than using the existing corresponding-account system — except that a lost password or security token can lead to much larger and more instant actual losses — which, as a reminder, has happened to more leading bitcoin exchanges than have managed to avoid it.

The same features that make the banking system attractive to end users also make it attractive to banks. They already have ledgers, and don’t need to distribute them, anonymize them, encrypt them, publish them, and make them irreversible.

(Source)

Ouch.

But go ahead a pour a lot of money into Ripple...it is going up in price after all.  

;(

 

Luke Moffat's picture
Luke Moffat
Status: Gold Member (Offline)
Joined: Jan 25 2014
Posts: 379
Chris...

I tried to talk him out of it, explaining that the big money has already been made, but he thinks it has a few more months left to run. He still plans to go ahead (not with my cash though).

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