PM Daily Market Commentary - 6/6/2018

davefairtex
By davefairtex on Thu, Jun 7, 2018 - 8:51am

Gold rose +0.10 [+0.01%] to 1300.60 on moderate volume, while silver climbed +0.20 [+1.21%] to 16.70 on very heavy volume. The buck fell -0.24% today, while copper jumped +1.71%. This suggests to me that the safe haven mood is ebbing, while – possibly – the inflation trade is coming back on. That is probably why silver rallied today, while gold did not.

Gold chopped sideways today, in spite of the Euro moving up +0.50%. That's not particularly good news for gold. Forecaster did move higher, up +0.10 to +0.57, but gold in Euros continued to decline.

COMEX GC open interest fell -3,992 contracts.

Rate rise chances (June 2018) remains at 94%.  The FOMC meets next week.

Silver rallied relatively strongly today, which moved silver to the upper end of its recent trading range. Silver forecaster jumped +0.32 to +0.23, which is a buy signal for silver. This caused the silver weekly to generate a buy signal also. Silver is now back above the 50 MA.  If you look at both the 50 and 200 MA lines, you can see they are more or less moving sideways.  This tells you that silver is not in a strong trend right now; forecaster buy & sell signals don't work well at all when prices move sideways.

COMEX SI open interest rose by 9,232 contracts today. That's a huge increase – some 21 days of actual silver production. Based on how things have gone recently, I'm guessing that managed money is shorting silver as we move to the upper end of silver's recent trading range.

The gold/silver ratio fell by -0.94 to 77.86. That's bullish.

Miners moved up today, with GDX up +0.62% on moderate volume, while GDXJ rose +0.09% on light volume. XAU forecaster jumped +0.46 to +0.34, resulting in a buy signal for the miners. XAU is now back above the 9 MA and is quite close to a move above the 200.  Contrast the XAU with gold and silver; it has moved steadily higher ever since the lows in early February, while gold has fallen, and silver has moved sideways.  That's a good performance for the mining shares, and it is also fairly unusual behavior.

The GDXJ:GDX ratio fell, while the GDX:$GOLD ratio rose. That's neutral.

Platinum rose +0.49%, palladium jumped +2.59%, and copper climbed +1.71%. The other metals looked strong, especially the industrial metals. Both palladium and platinum issued buy signals, while copper made a new multi-month high, on very high volume. Copper has broken sharply above its former downtrend line, and is in an uptrend in all 3 timeframes.

The dollar fell -0.22 [-0.24%] to 93.27. The DX forecaster moved slightly deeper into downtrend, losing -0.03 to -0.24. Weekly and monthly remain in uptrends, although they continue to fade somewhat. It was another good day for the Euro, up +0.50%.

Crude fell -0.51 [-0.78%] to 65.00. In spite of the decline, crude forecaster moved up +0.16 to -0.03. Is crude putting in a low? It could be. The spinning top candle was neutral, however. The EIA report was bearish (crude: +2.1m, gasoline: +4.6m, distillates: +2.2m) and crude sold off strongly (down $1.20) right after the report release, but then buyers appeared, which eventually erased much of the losses by the close. While crude didn't exactly rally on bad news, it did bounce back fairly strongly, which is a positive sign.

SPX rallied +23.55 [+0.86%] to 2772.35. This is another multi-month high for equities. Forecaster rose +0.27 to +0.59, which is now a fairly strong uptrend. Materials led (XLB:+1.85%) while utilities trailed (XLU:-2.38%) - this was a mostly bullish sector map. Utilities are looking terrible right now – they just made a new multi-month low.

VIX fell -0.76 to 11.64.

TLT fell -0.81%; the Italy-driven rally is continuing to unwind. TY agrees, losing -0.28%, with TY forecaster dropping -0.09 to -0.71. The TY weekly forecaster will issue a sell signal this week if we close at these levels. The 10-year yield rose +1.7 bp to 2.99%. We are almost back above 3%.

JNK rose +0.14%, moving higher after yesterday's buy signal.

CRB fell -0.09%; only 1 out of 5 sectors fell, but it was energy (-0.70%).

Copper has rallied sharply for the past 4 days, up 22 cents or about 7%. What does it mean?  Is the copper breakout a sign of something larger – some sort of inflation trend?  Silver is starting to notice the copper rally; we saw silver rally along with copper today, while gold lagged way behind.

This is something to keep an eye on, certainly.  Rallying copper prices are definitely not a sign of impending recession.  Just the opposite, in fact.

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