PM Daily Market Commentary - 5/14/2018

By davefairtex on Tue, May 15, 2018 - 2:52am

Gold fell -5.20 [-0.39%] to 1313.20 on moderate volume, while silver dropped -0.17 [-1.02%] on light volume. The buck rose just +0.03% - it wasn't a factor in today's drop in gold and silver.

Gold chopped sideways for most of the day, selling off in the afternoon in New York, and closing at the lows. Candle print was a swing high, which had a 48% chance of marking a near-term top. Forecaster actually moved up – what's that about? Still a downtrend though, at -0.19.

COMEX GC open interest rose 12,246 contracts. That's a reasonably large increase – 38 tons of paper gold, or about 6 days of global production.

Rate rise chances (June 2018) fell to 95%.

Silver fell substantially harder than gold – it started dropping earlier, and continued dropping along with gold in the afternoon in New York. Perhaps falling copper prices helped to pull silver lower. Candle print was also a swing high (49% chance of a top) but like gold, the silver forecaster actually moved higher, up +0.02 to -0.04. I don't have any explanation for why it did that. Normally the forecaster should have dropped after a move like we saw today.

COMEX SI open interest fell by -2,630 contracts today. That's a reasonably large move – 6 days of global production, as with gold – but in the opposite direction. Commercials are covering, probably.

The gold/silver ratio rose by +0.50 to 79.44. That's bearish.

Miners fell along with the metals, with GDX down -0.44% on moderately light volume, and GDXJ dropped -0.89% on light volume. Both ETFs printed swing highs (41/48% chance of a top). XAU forecaster did not issue a sell signal, however, moving up +0.01 to +0.03.  That's still an uptrend - just barely.  I can't say why the metals forecasters were so unmoved by today's price action. It will be interesting to see if they are seeing something that I'm not seeing.

The GDXJ:GDX ratio moved lower, as did the GDX:$GOLD ratio. That's bearish.

Platinum plunged -1.40% (swing high: 44%, forecaster sell signal), palladium rose +0.42%, and copper dropped -0.72%. Palladium and copper both remain in uptrends, although copper is weakening a bit. Platinum does not look happy at all.

The dollar rose +0.03 [+0.03%] to 92.20. While the buck didn't move substantially higher, it did rally in the afternoon in New York, and that may have helped both gold and silver to drop. Certainly the drop in gold happened at the same time as the move lower in the Euro. Today's modest move in the buck wasn't bullish; candle print was a neutral-looking doji, and forecaster dropped -0.07 to -0.35.

Crude moved up +0.69 [+0.98%] to 71.18. Crude forecaster reversed back into an uptrend, up +0.24 to +0.15. An OPEC report suggested that the oil glut is gone, and that a new concern is the lack of investment in CAPEX, which is down 42% from 2014 levels. Demand growth for 2018 (+1.65 mbpd) is projected to mostly match supply growth (+1.7 mbpd), most of which comes from US shale production. Venezuela lost another 41 kbpd this month.

SPX rallied +2.41 [+0.09%] to 2730.13. Trading range was narrow today; short black candle was neutral. Forecaster rose +0.01 to +0.54, still a reasonably strong uptrend. Sector map shows that energy led (XLE:+0.69%) while utilities trailed (XLU:-0.38%). Although the technicals aren't suggesting it, it feels to me as though SPX might have run out of momentum.

VIX rose +0.28 to 12.93.

TLT fell -0.53%, causing the forecaster to drop -0.35 to +0.08. TY confirms the plunge, losing -0.22%, making a new low, and moving deeper into downtrend. The 10 year treasury yield closed at 2.995%. We are moving closer to a breakout. All my indicators point at falling bond prices, and/or higher 10-year rates ahead.

JNK rose +0.03%, more or less unchanged. Although equities have rallied fairly strongly in recent weeks, JNK has struggled to move higher. JNK's forecaster ended the day at +0.03 – my sense is, if equities sell off, JNK probably makes new lows.

CRB rallied +0.13%, mostly unchanged. Only 2 of 5 sectors moved higher, led by energy (+0.81%).

To me, the metals look a bit weak. Intraday, the Euro dropped a bit, and gold and silver reacted poorly. Gold in Euros is now heading lower, after rallying for the past two months. Both gold and silver remain in downtrends, although silver weekly forecaster is hinting at a potential buy signal.

Miners continue to have a bid though, so that's a bright spot. They are doing surprisingly well.

Mostly I'm watching the bond market.  If the 10-year yield breaks conclusively through 3%, things could get interesting.

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Cold Rain's picture
Cold Rain
Status: Gold Member (Offline)
Joined: Jul 26 2016
Posts: 378

Setting up to be one of the worst days in the PM space in a long time.  10 yr is at 3.07 now!  Dixie is crushing it.  Gold, after trying for a long time, finally broke back below $1300.  I've kind of thrown in the towel on it getting to $1400 anytime in the near/medium term.  Maybe by 2022 or so, it'll be able to move toward it.  The miners aren't down as much as you'd think though, with the metals down as much as they are.  I guess that's good.  Wonder what King World News headlines will look like when gold gets down to near $1200.  I guess instead of "gold breaking out above $1370", it'll be "gold breaking out to $1220".  Sad.

Equities don't like higher rates either.  Don't know if any of you listen to the Macrovoices podcasts ever, but that's a really great podcast.  They've been saying that the 10 year over 3.05 is kind of the line in the sand (one of their guests said this) for when things start to fall apart with equities.  We'll see.

Anyway, interesting day.  Time for the run, don't walk thesis in the metals space.

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5681
gold 1300

Yeah, gold losing 1300 is a bad sign for sure.  It looks to be an important level apart from the round number.

I should have put the resistance there - but I didn't exactly expect this to happen.  :)

I agree the miners look ok all things the old days, gold off $30 would cause the miners to be down 8%.

Important level for silver is 16.

And as you say, rates through 3.05% are also a big deal.

New_Life's picture
Status: Gold Member (Offline)
Joined: Apr 18 2011
Posts: 395
mini bounce incoming..?

After continuing a hobby monitoring and learning TA with Crypto markets, I've started to look at PM's.

I think I might I see a standard Relative Strength Indicator bullish diversion on 4, 6 and 8hr timeframes, so although it allows for price to drop further, if the buy volume and strength keep increasing we may get a temporary bounce for a day or two.  The OBV Oscillator gives an indication of this too.

However I also have an UP-Trend that started Dec 2015, which would allow Gold to go as low as $1250 without breaking it.

Silver seems to be coming to a pinch point, a nice pennant forming between up and down trends ranging between $16 & $17 before it breaks either way, but a real decision on that might not play out until mid summer.

Have to say PM's look awfully sedate compared to BTC & co, still enjoyable to look at tho..

Just HODL folks, the Cartel want your PM's, will keep an eye on PM's, also for a bit of fun I might start to view FX too, its all good experience.




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