PM Daily Market Commentary - 8/29/2013

By davefairtex on Thu, Aug 29, 2013 - 11:05pm

Gold finished the day down $10.70 on moderate volume to 1406.80, with silver down $0.46 to 23.91 on  heavy volume.  The gold/silver ratio rose to 58.85.  In morning trading in asia the silver shorts came out of hiding and made their attempt, driving silver down to 23.70 on some moderate volume.  The dip was  bought right up until the GDP/Jobless Claims report, which after some back-and-forth sent the buck up more and PM down again.  Gold appeared stronger than silver but both metals closed near their lows for the day, a bearish sign.  This confirms the hammer candle on silver from yesterday and throws PM into a short term bearish trend.

Even with the move down in silver today, I must observe that the short assault seemed a bit light.  Price moved down, but it did not seem to be one of those all-out attacks that with silver currently so overbought could well have dropped silver $1.00 or more today on extremely heavy volume.  I've seen that before, and so what happened today was definitely pretty tame by comparison.  It just seemed that the sellers outnumbered the buyers by end of day, but not by all that much.  With the technical setup in the bears' favor, it could have been much worse.

The dollar was was up strongly today, +0.57 [+0.69%] to 82.03.  The dollar moved through its 20 EMA and the 200 MA confirming the low at 80.75 from a few weeks back.  Should the dollar continue up which given the rebound I would say is more likely than not, it will encourage the bearish PM trend.

Mining shares decided to rally today, with GDX up +0.85% on very heavy volume.  Given how weak the miners have been the last few days and given the drop in PM today, this was a surprise, and in trading these kind of surprises are a positive sign.  Early in the day shares opened and fell further, but rallied pretty strongly after the first hour.  They did not close at a high, printing a spinning top candle which shows indecision rather than a reversal.  Still, to rally on a day with gold down after showing so much weakness two days before I'll take as a bullish sign.  Sentiment seems to have reversed.  Perhaps buyers aren't willing to chase prices past a certain point, but at least they are showing up to buy the dip.  Price action during the day wasn't stunningly bullish but there was a small rise at end of day that looked hopeful.

So with PM leaning bearish, and miners perhaps somewhat bullish, I'm not sure what to think.  Buyers showed up, in volume, for miners today.  That's a good sign.  TA would say PM will likely correct further, egged on by the rebound in the buck, but downside pressure seems surprisingly light.  This leaves me cautiously bullish, but awaiting confirmation tomorrow.


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