PM Daily Market Commentary - 12/26/2013

By davefairtex on Fri, Dec 27, 2013 - 4:45am

Gold closed up +5.90 to 1210.30 on light volume, silver closed +0.31 to 19.78 also on light volume.  The gold/silver ratio dropped -0.66 to 61.19.  Silver was the star again, rallying above $20 for a time, but retreating into the close.  As a way to compare the two, silver closed above its 8 EMA, while gold did not.

The gold/silver ratio has been moving steadily lower for the past month after peaking Dec 2, and is about to break below both the 50 and 200 MA, which is bullish for PM.  Silver generally leads gold during uptrends, which is shown by a dropping gold/silver ratio.  Sometimes an incipient trend change can be picked up in a change in one of the ratios - as I think is the case here.

The dollar moved down fractionally, -0.04 [-0.05%] to 80.64.  Today the buck had a narrow trading range, no suprises, nothing to see here, move along.

GDX was up +0.10% on light volume, with GDXJ off -0.03% on moderate volume.  Miners opened up nicely on gold's rally, and then sold off back to even again.  It appears that there is a bit of overhead selling pressure on the mining shares...after yesterday's post-Christmas rally, it seemed that traders saw a 3% profit and decided it was time to ring the cash register and sell!  Sometimes the bottom is more of a multi-week sideways process than a three day rocketship affair.  If the miner selling continues, that would be a warning sign that we could expect another re-test of the lows for PM.

Bonds continued to sell off hard, with TLT down -0.71%.  10 year treasurys were at 2.99%, a two-year high.  A break above the psychologically important 3% level would likely lead to more selling of longer term treasurys, and higher rates all around.  Higher rates *should* put a limit on the Fed's willingness to taper, theoretically anyway.


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