PM Daily Market Commentary - 11/06/2013

davefairtex
By davefairtex on Wed, Nov 6, 2013 - 10:49pm

Gold closed up 5.60 to 1317.20 on light volume, and silver closed up +0.09 to 21.80 on moderate volume.  The gold/silver ratio was basically unchanged.  Gold rallied in asia, and then traded more or less unchanged for the rest of the day.  Silver rallied strongly in asia, but then could not hold onto its gains, closing up only modestly.  The current short term pattern in PM looks to be one of consolidation, mirroring the activity in the buck.

The dollar dropped -0.19 [-0.23%] to 80.57, closing just below its 50 day MA.  The buck remains in a tight range, and at this point could really go either way.

GDX opened up, and traded sideways all day long in a tight trading range, on light volume.  GDXJ was up +1.45%, also on light volume.  GDX appears to be in a tight consolidation with an upward bias; it would not take much of a move to trigger a buy signal in the miners.  The miner pattern looks to have bullish potential, which is as of yet unconfirmed.

The light volume and tight trading range once again leaves us waiting for a resolution.  As the Magic 8-ball would sometimes say:

Reply Hazy, Try Again Later.

 

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davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5058
ECB lowered rates - to 0.25%

This caused the euro to drop almost 1.5%, and gold to jump around before deciding to drop $10.  The buck hit 81.24, breaking up in a big way, up more than 1%.  It will be interesting to see where things finally settle out.  The move down in gold looks less dramatic than one might expect with such a large move in the currencies.

Note that part of the explanation (below) for the surprise rate cut had to do with deflation in the eurozone.  With bank credit contracting at 7% per year zone-wide, Draghi has to be worried.  To me, its extremely likely some sort of stimulus is next on the table.  Credit contraction and economic growth definitely don't go together.

http://www.bloomberg.com/news/2013-11-07/u-s-stock-index-futures-fall-before-gdp-report.html

The ECB cut its benchmark interest rate to a record low after a drop in inflation to the slowest pace in four years threatened its mission to keep prices stable. ECB PresidentMario Draghi lowered the benchmark interest rate to 0.25 percent from 0.5 percent, using one of his remaining interest-rate cuts to bolster the economy.

The ECB now has just one more quarter-point cut left before reaching zero, increasing the likelihood of unconventional tools such as quantitative easing or a negative deposit rate if prices slow further or the economic recovery stalls. Euro-area inflation is less than half the ECB’s target and unemployment is at the highest level since the currency bloc was formed in 1999.

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