PM Daily Market Commentary - 12/23/2013

By davefairtex on Tue, Dec 24, 2013 - 1:15am

Gold closed down -5.10 to 1197.50 on light volume, silver closed +0.05 to 19.44 on very light volume.  The gold/silver ratio dropped -0.41 to 61.60, silver once again outperforming gold.  Today not much happened, as evidenced by light volume and the $10 intraday trading range.  I think many traders are taking the week off.

The dollar closed the day down -0.14 [-0.17%] to 80.57, the boost to the buck from tapering seemingly starting to fade.  After hitting 81 last Friday, the dollar has dropped more than 0.40, which makes me think of the dollar as potentially making a lower high at 81.  Its not moving rapidly downhill, but neither does it look particularly strong, especially in view of the unexpected nature of the taper action from the Fed.  My mantra is always: "it's the market's reaction to the news that counts" rather than the news itself, and the buck's two-day bullish reaction to tapering does not look all that enthusiastic.

GDX was up +0.25% on very light volume, GDXJ was down -1.47% on moderately heavy volume.  GDX was slightly negative most of the day until the last few minutes, where it was bid up into the close.  Juniors (GDXJ) rallied early then sold off into the close, making a new multi-year low at end of day.  The reason behind the divergent behavior of the two ETFs is not clear to me, but this is a time of light trading and end-of-year book squaring, so some odd things can happen that don't really matter that much longer term.

As long as gold can avoid closing below 1179, I think there is a decent chance we get a positive move in gold and the miners sometime after Christmas and before the start of the new year.  This chance I see as improving if silver continues to outperform gold, and the (senior) miners avoid making serious new lows.


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