PM Daily Market Commentary - 5/24/2018

davefairtex
By davefairtex on Fri, May 25, 2018 - 12:51am

Gold climbed +11.10 [+0.86%] to 1304.10 on extremely heavy volume, while silver rallied +0.21 [+1.31%] to 16.68 on heavy volume. The buck fell, dropping -0.24%, however the move higher in PM wasn't primarily driven by currency today.  Instead, it looked to be a primarily news-driven market.

Potential drivers included Trump placing a 25% tariff on autos (out of "military necessity"), and also Trump pulling out of the talks with North Korea – with North Korea signaling later that it was still willing to engage. Italy was also a topic; MSM couldn't decide if the election was a nothing-burger, or if there was possible trouble ahead.

Gold rose steadily from the open, but then went vertical just after 9:30 am, jumping $8 to a new high of 1306.40; it kept most of those gains into the close. Gold forecaster jumped +0.44 to +0.77, which is a strong uptrend. Gold has broken conclusively above its recent trading range, and is now through its 9 MA also. Those are both bullish signs. Gold in Euros also moved higher; it is approaching a breakout point.

COMEX GC open interest rose 2,287 contracts.

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

Silver chopped sideways in Asia, but then rallied steadily for most of the rest of the day. In spite of the strong move, the forecaster dropped -0.09 to -0.12. I don't think I agree with it – but then again, forecaster hasn't been of much use lately in silver – it doesn't do well in sideways-trending markets.  You can see in the chart below how silver has traded in a rough sideways range for the past 4 months or so.

COMEX SI open interest rose by 6,147 contracts today; that's 955 tons of paper silver, or 13 days of global silver production – a large increase. My guess: that's managed money going short.  That probably helped cap silver's rally, which was still reasonably strong.

The gold/silver ratio fell by -0.35 to 78.16. That's bullish.

Miners moved up again today, with GDX rising +1.39% on heavy volume, while GDXJ climbed +1.39% on heavy volume too. GDX printed a swing low (60% bullish reversal). XAU forecaster rose +0.32 to +0.36, which suggests a strengthening uptrend. Miners looked strong today, and have moved to a possible breakout point.  XAU also closed at the day highs, which looks good too.

The GDXJ:GDX ratio was unchanged, and the GDX:$GOLD ratio rose. That's bullish.

Platinum rose +0.76%, palladium dropped -0.47%, while copper climbed +0.98%. The other metals did reasonably well; it wasn't entirely about a flight to safety today.

The dollar fell -0.22 [-0.24%] to 93.38. DX printed a bearish harami today (33% bearish reversal), and DX forecaster fell -0.09 to +0.16. That's not a top just yet, but it does suggest the buck's uptrend is weakening. That sense probably helped the metals, at least to some degree.

Crude plunged -1.16 [-1.61%] to 70.67. Crude sold off for most of the day. Crude printed a swing high, which is bearish.  Forecaster also fell, dropping -0.26 to -0.20, which is a sell signal for crude. Crude has also fallen below its 9 MA. That's all bearish. If we close at these price levels, crude will also issue sell signals for both the weekly and monthly timeframes. Buyers better show up soon, or else we're going to see a correction.

SPX fell -5.53 [-0.20%] to 2727.76. SPX had a 25 point sell-off after market open, hitting bottom at 11 am, but then bounced back strongly erasing most of the loss. Sector map looked a bit like yesterday: utilities led (XLU:+0.82%) while energy did worst (XLE:-1.64%). It was a somewhat bearish pattern.

VIX fell -0.05 to 12.53.

TLT rallied hard again today, up +0.80%. TY wasn't so enthusiastic, rising just +0.06%. TY saw very heavy volume. Perhaps traders are jumping in short. The 10-year treasury yield ended the day at 2.98%.

JNK inched up +0.03%, which is another day of mostly no movement. JNK is moving slowly higher.

CRB fell -0.35%, with 3 of 5 sectors moving down, led by energy (-1.18%). PM did best, up +1.22%.

Gold continues to follow through off yesterday's safe haven move.  We're also seeing the long bond continuing to move higher, as well as the utility stocks too.  At the same time, though, the buck may be starting to reverse.  Its hard for me to know how which headlines drove which price movements; I don't have a timestamped news feed.

Gold in Euros is looking quite strong right now.  If the buying in Europe continues, then gold should continue moving higher, even if the buck doesn't end up reversing after all.

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