PM Daily Market Commentary - 4/11/2018

By davefairtex on Thu, Apr 12, 2018 - 5:18am

Gold rallied +13.80 [+1.03%] to 1356.80 on very heavy volume, while silver climbed +0.11 [+0.63%] to 16.67 on extremely heavy volume. The buck was virtually unchanged today; the rally in gold seemed to be all about a safe haven bid driven by the prospects of war in Syria.

Gold moved higher for most of the day, starting in Asia and finally topping out at 1369.40 at 11:30 am in the US, spiking briefly above the previous high of 1365.40 set back in January. Gold's candle print was another opening white marubozu. and the forecaster jumped +0.23 to +0.50. Gold's new high is a bullish sign, although it would have been better if gold had managed to close above the previous high. As to why that didn't happen...

COMEX GC open interest rose +34,343 contracts. This was a massive increase in open interest, some 106 tons of new paper gold; my belief is that this was official intervention whose purpose was simply to keep gold from smashing through to new highs. From what I can tell, this is a fairly standard action taken during times of increased stress - today's OI increase was about 68% of what occurred immediately following BRExit.

Rate rise chances (June 2018) rose to 93%.

Silver tracked gold higher, staging a new minor breakout, but it was only able to hold onto a third of its gains by end of day. Still, the spinning top candle was a bullish continuation, and the the forecaster moved up +0.11 to +0.09, which is a buy signal for silver. Weekly silver remains in a downtrend, but monthly silver will issue a buy signal if we close here at end of month.

COMEX SI open interest fell by -2,514 contracts today. That looks like short-covering.

The gold/silver ratio rose +0.32 to 81.39. That's bearish.

Miners moved higher, with GDX up +2.20% on very heavy volume, while GDXJ rallied +2.36% on extremely heavy volume. Both ETFs printed bullish continuations: long white, and a spinning top candle. XAU staged a mini-breakout, moving up to a multi-month high.  XAU forecaster moved up +0.38 to +0.44, which is a strong uptrend.  XAU is now above all 3 moving averages.

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

Platinum rose +0.25%, palladium moved up +1.34%, while copper dropped -0.84%. All 3 other metals are in daily-chart uptrends, although platinum took a bit of a hit today; the platinum forecaster didn't like that shooting star, dropping -0.12 to +0.26.

The buck edged down -0.03 [-0.03%] to 89.19. Candle print was a southern doji, which was actually a bearish continuation. Forecaster agreed, dropping -0.07 to -0.33. Buck remains in a downtrend.

Crude rallied +1.15 [+1.76%] to 66.67, breaking sharply above the multi-year high and even managing to close (slightly) above it. Volume was extremely heavy on the breakout. While the EIA report was bearish [crude: +3.3m, gasoline +0.5m, distillates -1.0m], it did not seem to matter, with crude rallying a full $1 after the report came out. How much was geopolitics vs. relief from the trade war worries? Its hard to know. Crude forecaster jumped +0.31 to +0.71, which is a strong uptrend.

SPX fell -14.68 [-0.55%] to 2642.19. SPX tried to rally today but failed. SPX forecaster wasn't happy, falling -0.13 to +0.25. Sector map shows that financials led lower (XLF:-1.19%) while energy did best (XLE:+1.04%). Energy was the only one of the main sectors that moved higher today.

VIX fell -1.30 to 20.47.

TLT rose +0.36%, opening higher, but then encountering selling pressure during the trading day. TY rose +0.11%, which impressed the forecaster (+0.27 to +0.02 – a buy signal for TY) but doesn't honestly look all that good to me.

JNK was unchanged today, printing a neutral doji candle; JNK forecaster ticked down -0.03 to +0.64. That's still a strong uptrend.

CRB jumped +0.87%, another good day for CRB, moving it back up towards the highs set back in January. 4 of 5 sectors moved higher, led by energy (+1.68%). Industrial metals, PM, energy, and agriculture have all rallied fairly strongly over the past 4 days, and are nearing the highs set back in January.

I feel that, if not for the large increase in gold's open interest today, price probably would have smashed through overhead resistance.  My sense is that the official actors can keep a lid on price as long as it is just a one-day affair.  This approach will stop working if confidence actually starts to break down for real.

Crude also broke out to new highs; a combination of geopolitics, oil market rebalancing, and reduced fear of a trade war.  Unlike gold, crude has nobody on the official side that wants to see prices kept under control.

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hammer6166's picture
Status: Bronze Member (Offline)
Joined: Apr 30 2010
Posts: 33
Missile attack on Saudi Arabia

It looks like some of the move in oil is attributed to missile attacks on Saudi Arabia. A few of the missiles were intercepted over the capital of Riyadh. Trump's threatened intervention in Syria was reported to be another contributing factor.


davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5926

Yes I totally forgot about the missile attack on the Saudis.

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