PM Daily Market Commentary - 4/17/2018

By davefairtex on Wed, Apr 18, 2018 - 2:15am

Gold rose +1.60 [+0.12%] to 1350.50 on moderate volume, while silver moved up +0.12 [+0.72%] to 16.79 on heavy volume. The buck rose +0.10%, a small move, which did not seem to affect the price of the metals today. With Syria off the headlines, the focus seemed to be on earnings.  There were a few economic reports; today saw housing starts as well as industrial production, but neither report generated any strong moves in prices.

Gold sold off for much of the day, making its low right around 9 am, but then managed to find buyers, eventually rallying back to a bit better than flat by end of day. Roughly speaking, gold's track followed the Euro. The high wave candle print was neutral, while the forecaster climbed +0.33 to +0.24, which is a buy signal for gold.  Forecaster is a lot happier with gold's performance today vs yesterday.

COMEX GC open interest rose 4,336 contracts.

Rate rise chances (June 2018) rose to 97%.

Silver sold off a bit less than gold, and rallied more strongly, printing a bullish continuation/closing white marubozu. Forecaster moved up +0.08 to +0.15 – yesterday's buy signal turned out to be prophetic.  Silver is now (just barely) back above its 200 MA, which has acted as strong resistance for the past 4 months.  Today we saw a strong rally in silver even though the dollar rose also.  That's a good sign.  Volume is also rising along with price.  That's positive too.

COMEX SI open interest rose by 1,742 contracts today.

The gold/silver ratio fell -0.48 to 80.46. That's bullish.


Miners moved higher, with GDX up +0.57% on moderately light volume, while GDXJ also rose +0.57% on very light volume. The XAU forecaster saw something it really didn't like; it plunged -0.41 to -0.18, which is a sell signal for the mining shares. I'm not sure what that's about; the XAU model has a large number of inputs to it. The HUI model also issued a sell signal too. It does look as though the momentum for the miners is slowing down.

Today, the GDXJ:GDX ratio was flat, while the GDX:$GOLD ratio rose slightly. That's somewhat bullish.

Platinum rose +0.78%, palladium climbed +1.13%, while copper was unchanged. Thats now 7 straight days up for palladium, platinum appears as though it might be ready to break higher, while copper is trying to sort out where it will go next. It was a mostly-positive day for the other metals.

The buck rose +0.09 [+0.10%] to 89.13. The buck made a new low, then it tried to rally, but then ended back near to where it started. The spinning top candle was neutral, while the forecaster rose +0.19 to -0.47. That's still a downtrend for the buck.

Crude rose +0.34 [+0.51%] to 66.66 – an interesting closing price. Candle print today was a bullish harami, which was actually just neutral. Forecaster agreed, edging down -0.01 to +0.03; still an uptrend, just barely. The API report after market close was bullish [crude: -1.05m, gasoline: -2.47m, distillates: -0.85m], which was good for a 20 cent rally. Crude is managing to stay in the mid-60s even without the influence of geopolitics. A large amount of shale production has already been hedged at this point; perhaps the selling pressure has abated somewhat as a result.

SPX rose +28.55 [+1.07%] to 2706.39. A rally overnight in the futures markets helped SPX to gap up at the open; the short white candle was a bullish continuation. SPX forecaster rose +0.13 to +0.57; SPX remains in a reasonably strong uptrend. Tech led (XLK:+1.86%) while financials brought up the rear (XLF:unchanged). NFLX had a particularly good day (+9.19%) on unexpectedly good subscriber growth. Apparently it makes money too, although not very much. FANG stocks overall are recovering from their March “dip”.

VIX plunged -1.31 to 15.25.

TLT rallied +0.27%, following through off yesterday's swing low. TY wasn't nearly as impressed, rising just +0.01%; TY forecaster rose just +0.01 to -0.21. TY remains in a downtrend. 10-year yield fell to 2.81%.

JNK moved up +0.06%, trying to rally but largely failing. The shooting star candle was just neutral, but the forecaster wasn't happy, dropping -0.25 to +0.53. That's still an uptrend, just not quite as strong as before.

CRB edged down -0.08%, with 3 of 5 sectors dropping, led by agriculture (-0.24%). There was not much movement at all in the commodity space.

Gold did a lot better than I had feared today; even with a minor dollar rally, gold managed to rally back from its drop.  Silver is doing even better, with a strong move today through the 200 MA.

I'm not sure what sort of catalyst would drive gold through 1377; given the still-weak gold in Euros charts, I do not think we are quite ready for the big breakout.

Silver is looking steadily stronger.  A close above the set of recent highs (say, 16.90) could lead to a very large short-covering rally.  Certainly the COT report is all lined up for this event.

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Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 393

Still a lot of time left in the day to reverse, but it is finally catching a good bid today.  Would be nice to see this action persist through the end of the week.  Gold is doing ok, too, particularly the last couple of days where the dollar has been fairly flat.

Michael_Rudmin's picture
Status: Diamond Member (Offline)
Joined: Jun 25 2014
Posts: 1041
Interesting times.

I'm seeing two very strong forces in play here right now: one is a gold price cap at 1360 or so. When it pushes that number, high volume sales drive it down. Another is a rising basement price that has been established for quite some time. I don't know what causes this -- chinese bidding and receiving? First-world distrust? But the range is getting very squeezed, and very high-frequency.


I consider the possibility that until this breaks and when it breaks, elliott theory (which depends on mass psychology) may not apply... depending on if this is all being driven by only two actors (chinese govt vs Hansa League government-over-the-western-govts, for example).

Once it does break, and one side surrenders, I'd expect elliott theory to take back over.

All very interesting, as I say. Seems to be my word of the day.

I'll be interested to see how this breaks.

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5926
silver: +0.41 to 17.20

The commercials are on our side right now.  The question is, when will managed money capitulate and cover?  Once that happens, we could see some pretty amazing moves.  $0.50 - $1.00 per day sort of moves.  Managed money is record short, and silver is a small market, and those commercials will just keep adding to their longs as managed money panics out.

All the "other metals" are supporting silver's move right now.  Copper is up almost as much as silver at this point.  Even crude is doing its part: up +2.38% to a new high of 68.44.

If we close above 17 today, I think we're off to the races.

All this fuss might even pull gold above 1377.

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