PM Daily Market Commentary - 6/27/2018

By davefairtex on Thu, Jun 28, 2018 - 4:48am

Gold fell -7.00 [-0.56%] to 1253.80 on moderate volume, while silver plunged -0.26 [-1.60%] to 16.02 on heavy volume. The buck shot up +0.62 [+0.66%] to 94.97; this says gold in Euros actually rallied somewhat. It was a big day for the buck, which broke out to a new closing high.

Gold sold off in Asia, tried to recover, then sold off again as the Euro plunged.  I noticed several downspikes - it looks like someone was pounding price lower, to some degree at least - but the price moves weren't all that dramatic even though a fair number of contracts were liquidated.  The day's candle print was a bearish continuation, gold made a new low, and gold forecaster dropped -0.22 to -0.52, which is a steeper downtrend. Weekly chart shows the previous low is at 1238. The dollar rally is doing no favors to gold priced in USD. Gold in Euros did manage to move higher today, but it too remains in a downtrend. I wish I had some positive news, but there isn't any to report.  Perhaps - gold's RSI-7 is 13, which is very oversold.  So theoretically it should bounce.  Sometime.  Maybe at 1238.

COMEX GC open interest rose 2,441 contracts.

Rate rise chances (September 2018) fell to 71%.

Silver meandered lower for much of the day, only to sell off in earnest just after 3pm - there was a big downspike that seemed calculated to run the stops around 16.10.  Silver is at first notice day; perhaps that's a reason for all the funny business.  Silver's candle print was a black marubozu, which was a bearish continuation. Forecaster plunged -0.62 to -0.60, which is a steep downtrend. Silver has broken support, which could lead to an even larger amount of selling in the near future - assuming this isn't just about the commercials playing games at delivery. The next price level to be concerned about is the previous low at 15.63 - not visible on the daily chart.

COMEX SI open interest rose by 333 contracts today.

The gold/silver ratio rose +0.82 to 77.82, which is bearish.

Miners shot up in the first hour, and then sold off for the rest of the day, with GDX off -0.64% on moderate volume, and GDXJ fell -0.83% on moderate volume also. These marked a new low for GDXJ, but GDX managed to avoid a new low, as did XAU. The failed rally resulted in a shooting star candle print for GDX. XAU forecaster dropped -0.29 to -0.57, which is a steeper downtrend. I have to say, in spite of the down day, the miners continue to do well; there is no wholesale panic out of the mining shares right now, which is surprising to anyone that suffered through the 2013-2016 bear market in the miners. "It sure could have been worse."

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

Platinum fell -0.81%, +0.02%, palladium dropped -0.93%, but copper managed to rally +0.15%, the sole element in the group in positive territory today. How did it do that? It was a contract roll, which gave copper 2 cents at the open – which then was lost over the course of the trading day. So copper actually fell too, if you ignore the roll. Platinum made a new multi-year low, and appears to be headed for a re-test of the 2016 low of 811.40. The platinum/gold ratio is 1.45, which is close to an all time high. The other metals did not do well.

Crude rallied +1.62 [+2.29%] to 72.30, following on from yesterday's big announcement about cutting off Iran's oil buyers.  To fan the bullish flames, the EIA report was very strong (crude: -9.9m, gasoline: +1.2m, distillates: unchanged), which resulted in about $0.50 of the gains of the day.  Crude is knocking on the door of the previous high, and its RSI-7 is only 76, which still leaves plenty of room for a breakout.  The COT report from last week shows that managed money bailed out on a large number of crude long contracts during the recent $10 correction, and so they are significantly under-positioned for this rally.   Crude has rallied $6 over the past 4 days; thats a big move for the master resource.  If you are long crude, then thank OPEC, and then Trump.

The buck shot up +0.62 [+0.66%] to 94.97. DX printed a swing low (55% bullish reversal), and a forecaster buy signal (+0.38 to +0.32), and made a new closing high to boot. The dollar uptrend is back - in all 3 timeframes. The correction in the buck lasted all of 3 days.  I hate to say it - who's your daddy once again?  The US Dollar.  For you dollar-haters out there - and you know who you are - a more palatable way of hearing this might be, "money is once again fleeing emerging markets and Europe."

SPX plunged -23.43 [-0.86%] to 2699.63.   SPX was all over the map today - plunging in Asia, rallying in London, and then basically cratering after 10:30 am in New York.  Candle print was an ugly-looking closing black marubozu - the market closed at the lows of the day.  Tech (XLK:-1.36%), cyclicals (XLY:-1.29%) and financials (XLF:-1.24%) led the market lower, while energy did best (XLE:+1.34%). This sector map is a classic bearish pattern. Yesterday's feeble SPX rally turned out to be a dead cat bounce.

VIX rose +1.99 to 17.91.

TLT shot up +0.94%, making a new high, and generally screaming “flight to safety”. TY agreed, jumping +0.31% with its forecaster up +0.16 to +0.76. That's a very strong uptrend. The 10-year yield fell -5.3 bp to 2.83%.  If the Chinese are selling Treasury bonds to hose us, then everyone else is loading up on them.

JNK fell -0.25%, making a new low, but managing to avoid any real plunge. It is a bit mystifying why JNK is doing relatively well. Maybe its the energy rally.

CRB rose +0.86%, with 3 of 5 sectors moving higher, led by energy (+2.58%). PM is doing poorly, while energy is just screaming higher.

So your friends right now are bonds, the buck, and crude oil. Everything else is being sold.

However, I have to say, gold wasn't being singled out for punishment.  Here's the PM sector map. You can see gold/euros is rallying and gold is actually at the top.  (Ignore copper; that was the contract roll, as I explained earlier).  Silver on the other hand...taken out to the woodshed.  And we could have some more selling coming.  Hopefully that was just some funny business around delivery.  We'll have to see what happens tomorrow.

Name Chart Chg (D) 52w ch MA9 MA50 MA200 50/200 Last Crossing last
Gold/Euro $GOLD:$XEU 0.34% -1.90% falling falling falling falling ma200 on 2018-06-25 2018-06-27
Copper $COPPER 0.15% 13.46% falling falling falling falling ma50 on 2018-06-19 2018-06-27
Gold $GOLD -0.56% 0.51% falling falling falling falling ema9 on 2018-06-15 2018-06-27
Senior Miners GDX -0.64% -2.02% falling falling falling falling ema9 on 2018-06-15 2018-06-27
Platinum $PLAT -0.81% -6.22% falling falling falling falling ema9 on 2018-06-15 2018-06-27
Junior Miners GDXJ -0.83% -4.06% falling falling falling falling ema9 on 2018-06-25 2018-06-27
Palladium $PALL -0.93% 10.55% falling falling rising falling ma50 on 2018-06-19 2018-06-27
Silver Miners SIL -1.49% -16.90% falling falling falling falling ema9 on 2018-06-08 2018-06-27
Silver $SILVER -1.60% -3.58% falling falling falling falling ema9 on 2018-06-15


Ok, there's one more chart.  It's my housing chart.  The MSPNHSUS is the "Median Sales Price for New Houses Sold in the United States" timeseries.  New home sales have done poorly over the past few months, and that was enough to tip my "housing market affordability" series into bearish territory.  It is a little more complicated than just the MSPNHSUS ... I divide by average wages - that's what makes it an affordability series rather than just a price series.  I could explain why I did that, but ... its technical and ultimately not important.

Anyhow, its tipped over.  That's not a good sign.

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1 Comment

Penny551's picture
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 157

Interesting chart.  Can you include that from time to time?  Thx again!

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