PM Daily Market Commentary - 6/28/2018

davefairtex
By davefairtex on Fri, Jun 29, 2018 - 7:07am

Gold fell -4.30 [-0.34%] to 1249.50 on moderate volume, while silver rose +0.02 to 16.05 on heavy volume. The buck rallied +0.13 [+0.13%] to 95.10, which accounts for at least some of gold's drop. The “rally” in silver was just a contract-roll artifact good for a 10-cent move up, which tells us that silver actually fell 8 cents. The rest of the metals had a bad day also.

Gold chopped lower in a fairly narrow range today, closing just a buck or so above the low.  Gold's candle print was a long black/bearish continuation, gold made yet another new low, and gold forecaster rose +0.14 to -0.33, which suggests that the downtrend is slowing. That previous low is still waiting at 1238. Gold's RSI-7 is down to 11, which is very oversold.  To provide some perspective, over its entire 10,922 trading day history, the GC contract has only spent 57 days at or below RSI-7 11. This suggests gold “should” bounce soon.  Theoretically anyway.

COMEX GC open interest rose 793 contracts.

Rate rise chances (September 2018) remains at 71%.

Silver chopped sideways until about 7 am, after which it sold off for much of the rest of the day, making a new low to 15.96.  As mentioned, the contract roll added 10 cents to the price - so instead of rallying 2 cents, silver really lost about 8.  Most of the TA for silver was thrown off by this effect.  Normally silver doesn't have such a strong contango. 

COMEX SI open interest fell by -8,031 contracts today.  That's a big change.

The gold/silver ratio fell -0.37 to 77.87.

Miners rallied today, with GDX up +0.55% on moderate volume, while GDXJ moved up +0.19% on moderately light volume. That's a decent performance on a day where the metals fell. XAU edged down -0.13%, which took the forecaster down -0.02 to -0.55. Miners remain in a downtrend, but the rallies in the mining ETFs might be forecasting a rebound in the metals. They do tend to lead.

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

Platinum fell -1.06%, palladium dropped -0.74%, and copper moved down -0.97%. Those are two new lows for both copper and platinum. Copper's decline over the last few weeks is really remarkable. Clearly the other metals are having a difficult time right now.

The buck rallied +0.13 [+0.13%] to 95.10, making a new closing high today comfortably above round number 95.  All systems go for the buck, all 3 timeframes.  Things are slowing down a bit on the weekly timeframe, but the trend remains up.

Crude rallied +0.98 [+1.36%] to 73.28, breaking out to a new high, following through after all the oil-positive news this week. In fact, oil is looking stronger than oil equities, which suggests to me that perhaps oil is getting a bit ahead of itself on the enthusiasm about Iran.  Forecaster is telling us that the uptrend is slowing.  Uptrend in all timeframes - the monthly looks particularly strong.

SPX rallied +16.68 [+0.62%] to 2716.31, making a new low, and then rallying relatively strongly, printing a “thrusting” candle which has an 49% chance of marking the low.  Forecaster wasn't impressed, losing -0.05 to -0.82, which is a strong downtrend.  Tech led (XLK:+1.22%), while energy did worst (XLE:-0.13%).  Perhaps that's a bit bullish.

VIX fell -1.06 to 16.85.

TLT was almost unchanged, up just +0.03%. TY actually sold off, dropping -0.13%. The 10-year yield rose 2 bp to 2.85%. If equities really do put in a low here, this probably marks the top for bonds.

JNK fell -0.36%, dropping sharply and making a new low. This is a divergence from normal behavior, and a fairly dramatic one. Normally JNK rises when equities rise, but this was a bad day for JNK. HYB didn't move much, so this was something specific to junk debt.

CRB was virtually unchanged, down -0.03%; 3 of 5 sectors fell, led by agriculture (-0.99%).

All the metals continued to move lower today; while hope says that gold is nearing a low, so far it isn't evident on the charts - at least not on the metals anyway.  Perhaps the miner ETFs are hinting that a low is near.  Hmm.  One last chart.  This one, the GDX:$GOLD chart.  It is showing a bullish cup & handle pattern, and today it just broke out.  This is strongly telling us that "someone" thinks the miners are a good deal at these prices.

This could be a tell.

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1 Comment

charleshughsmith's picture
charleshughsmith
Status: Platinum Member (Offline)
Joined: Aug 15 2010
Posts: 716
why are gold and the yen correlated?

Not asking for a definitive answer, just wondering--why does gold track the yen so closely?  They're much more correlated than USD to gold or SPX to gold (and I include inversely correlated as "correlated".)

McClellan had an email out showing that when the yen is strengthening and gold is dropping, gold tends to catch up to yen rather than vice versa. This is a peculiar correlation--are they both "safe havens"?  Any light you can shed would be appreciated--

 

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