PM Daily Market Commentary - 1/11/2018

davefairtex
By davefairtex on Fri, Jan 12, 2018 - 8:48am

Gold rose +5.60 [+0.43%] to 1323.00 on moderately heavy volume, while silver rose +0.01 [+0.06%] to 17.00 on very heavy volume. While currency had some strong moves (USD down -0.54%), the specific moves did not seem to drive prices of either gold or silver.

Behind the big dollar move was news out of Europe, where there was talk that the ECB might be considering reducing money printing. The Euro took off like a shot at 7:30 am, and eventually was up 1%. However, neither gold nor silver moved as a result of the big currency move. That's surprising, since strong moves in currencies typically cause gold and silver to move along with them.

Today, gold just moved slowly but steadily higher all day long, ending the day near its highs - but the trading range was fairly small. Candle print was a long white candle, which the code felt was neutral. The forecaster jumped +0.28 to +0.11, which is a buy signal for gold. If the buck continues to fall, gold will likely break out to new highs. Given the fuss in currencies, today's move by gold was quite mild.

COMEX GC open interest fell by -1,938 contracts today. It doesn't look like commercials are capping the move any longer.

Rate rise chances (March 2018) remains at 67%.

Silver's pattern was different – it chopped sideways until 10:24 am, where it was hit with a spike assault which drove silver down to its day low of 16.88. Silver bounced back, was hit again in the afternoon, and then bounced back once more, closing more or less unchanged on the day. The doji candle was neutral, while silver's forecaster moved up +0.08 to -0.16. Silver remains in a downtrend.

COMEX SI open interest rose +282 contracts today.

The gold/silver ratio rose +0.28 to 77.82. That's bearish.

Miners moved slowly higher, with GDX up +0.56% on moderate volume, while GDXJ climbed +0.83% on heavy volume. XAU forecaster jumped +0.36 to +0.17, which is a buy signal for the mining shares. Perhaps that's all the correction we'll see – that's especially true if the buck continues to plunge.  While miners aren't setting the world on fire, they definitely do seem to have a bid underneath them.  XAU is now back above its 9 MA.

Today, the GDXJ:GDX ratio rose, as did the GDX:$GOLD ratio. That's bullish.

Platinum climbed +1.34%, palladium fell -0.12%, while copper dropped -0.28%. Platinum broke out to new highs; it has been on a tear now for a while, clearly outperforming both gold and silver.

The buck plunged -0.47 [-0.51%] to 91.54 as a result of the large Euro rally. The buck is hovering right around 91.50 support right now – a break of 91.50 takes us down into the 91 region, which is dangerous territory. Forecaster fell -0.10 to -0.33, which puts the buck a bit deeper into downtrend.

Crude spiked up to a new high of 64.77, but lost almost all of those gains by end of day, rising just +0.06 [+0.09%] to 63.50. The northern doji candle had a 53% chance of being a bearish reversal. Forecaster plunged -0.28 to +0.20. That's still an uptrend, but the failed rally on massive volume doesn't look good for crude. This may mark the top for a while.  However...energy equities are doing really, really well. 

SPX jumped higher, up +19.33 [+0.70%] to 2767.56, making a new all time high. Mostly that was about a massive rally in energy (XLE:+2.05%) but also cyclicals (XLY:+1.63%) and materials (XLB:+1.31%). Utilities brought up the rear (XLU:-0.37%). That's another new low for XLU.

VIX rose +0.06 to 9.88.

TLT rose +0.41%, seemingly confirming yesterday's reversal, printing a strong swing low (80% chance of a bullish reversal) but sending TLT forecaster up just +0.16 to -0.39. TY didn't do nearly as well, rising just +0.03%, unable to print a swing low of its own. TY forecaster rose just +0.02 to -0.63. Bonds remain in a downtrend.  I'm thinking follow TY, not TLT.

JNK rose +0.24%, printing a swing low of its own (42% bullish reversal), which isn't all that great. Forecaster rose +0.20 to -0.25. JNK remains in a downtrend.

CRB rose +0.15%; only 2 of 5 sectors rose, led by energy. Commodities had a bit of a failed-rally look today, probably because of what happened to oil. Still, CRB remains near multi-month highs, and in an uptrend. Pulling back to the weekly chart, CRB appears to be right on the cusp of a major breakout – a break above the 195 level for CRB would take us to levels not seen since 2015.  A breakout could be a big deal.

As I write this – a bit late – there are reports of an agreement between Merkel's CDU and the SPD to form a new government. https://www.reuters.com/article/us-germany-politics/merkel-strikes-deal-with-social-democrats-opening-way-to-new-german-government-idUSKBN1F10EO. I'm curious to see how migration policy came out – but that wasn't spelled out in the article.  The terms must still be voted on by the rank & file.  Assuming all goes well with the party voting, the new government will be in place March or April.

This news sent the Euro up a full point – and the buck down too, of course. Currently its at 91.15.

The buck remains in a downtrend, so do bonds, and much of the PM group is back into an uptrend. How long will the Euro rally on the back of this agreement? Enough to force the buck below 91? Could be.

That would be good for PM.  And that potential commodity breakout, good also.

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2 Comments

Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 351
PMs Screaming

After a fairly big down spike this morning, they're rolling now.  USD about to break 91.  Probably the reason for the move higher in PMs.  Miners doing fairly well too, except for AG.

davefairtex's picture
davefairtex
Status: Diamond Member (Online)
Joined: Sep 3 2008
Posts: 5267
down spikes

Yes the down spike looked like an attempt to startle the horses.  More than 12k contracts in gold (probably a bunch of long-side stops) and 3k contracts in silver were traded in the 1-minute bar at 8:30 am.  Bonds did take a hit at that time too, but the magnitude of the selling in gold and silver was just a bit much for me to believe.

When the attempts to stampede the herd fail - that's an awesome sign.  "Thanks for the discounted gold, now we'll buy some more."  The buying pressure really came on once the buck broke 91.  It was no big up-spike - just a steady move higher that looks a whole lot like real, honest buying - "as slowly as possible so you don't move the market too much."  Miners had much the same pattern; they did well, but the strong up-move started once the buck dropped through 91.

Man, buck down -1.19% in just one day; EUR up +1.39%, to 122.18, a new high.

Thank the SPD for your new higher gold price.

 

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