PM Daily Market Commentary - 9/04/2013

By davefairtex on Thu, Sep 5, 2013 - 12:25am

Gold finished the day down $20.60 on moderate volume to 1391.30, with silver down $0.83 to 23.48 also on moderate volume.  The gold/silver ratio rose to 59.27.  The big move down in silver started around midday in asia - once 24.30 support broke, the shorts repeatedly pushed the futures down past the NY open, washing out longs all the way to the 23.40 level which was hit around 10:00 EST.  Coming on the heels of such a strong up day Tuesday, it is perplexing.  Price action tells me the shorts were aggressive and motivated - every rally attempt was sold.  Copper sold off with much the same pattern in a similar timeframe, although its percentage move down was less.  When copper is involved I always think of China, but honestly I don't have a clear reason for this big move down.

The dollar was also down on the day, closing -0.23 [-0.27%] to 82.18 moving back below its 50 day MA.  Might this mark the top of the dollar's week-long rally?  Theoretically at least a weak dollar should have been supportive of PM, but it didn't appear to help today.

Mining shares were mixed on the day.  GDX actually moved up +0.63% on moderately heavy volume, while GDXJ moved down -0.76% on light volume.  How to interpret this, on a day when silver gets pounded?  You've got me.  Senior miners looked good especially given the 1.5% drop in gold, with many mining names I watch finding good support at their 20 EMA.  Miners rallied into the close, which is a bullish sign.

If I ignore the crazy PM gyrations of the last few days and instead just focus on the mining shares, I'd say big guys are accumulating shares at this point, with some pretty decent support on the 20 day EMA.  They aren't willing to chase prices higher, but they appear more than willing to buy the dips.  There is not much selling pressure.  That's bullish.

Which is more predictive of future prices?  I don't know.  PM is still in its short-term correction phase which a trader with a bullish perspective would call "working off an overbought condition."  Since we're in a medium term uptrend, that perspective works best for me.  Perhaps tomorrow will provide more short-term clarity.

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