PM Daily Market Commentary - 1/30/2014

By davefairtex on Fri, Jan 31, 2014 - 12:24am

Gold closed down -24.30 to 1243.30 on heavy volume, silver down -0.58 to 19.12 on moderately heavy volume.  Gold/silver ratio rose again, +0.66 to 65.01, yet another cycle high for the GSR.  Gold was sold all day starting in Asia right up through the open in NY.  Silver once again did worse than gold, at one point spiking below 19 before rebounding weakly.

Gold seemed to find support on its 50 MA, but today's high volume move down erases two weeks of positive movement for gold.  Silver is precariously suspended above 19, which is a critical support level.  A serious move below 19 and silver could drop $1 in a hurry.  And if silver breaks the July lows of 18.17...perhaps 15 is the next strong support.  I had to look at monthly charts to see that 15 support level, dating back to 2010.

If it weren't for silver's continuing awful performance, I'd be more consistently bullish about gold.

Part of the reason for gold's big drop: the USD had a huge up day, +0.53 [+0.66%] to 81.19, blowing back through its 50 day MA.  My thoughts about the USD's initial ho-hum reaction to the Fed taper were way off base.  It seems to me that while the US markets had one opinion as to what should happen with PM and the USD, once the rest of the world saw tapering, they had quite another set of opinions.  And in the struggle, the rest of the world won.  Most of the USD's upside move today came prior to the NY open, at the same general time of gold's downside move.

GDX closed down -2.17% on moderately heavy volume, while GDXJ was off -3.69% on extremely heavy volume.  Mining shares opened lower, and then traded mostly sideways during the day with a slight upward bias.  Of all the PM instruments, charts of the miners still look the best, with GDX:$GOLD still looking quite strong, even after today's down day.

Will the post-taper gold blues turn into a trend?  We must await those COMEX buyers, to see if and when they will appear to put a floor on gold's move down.  Certainly the COMEX silver buyers seem to be on strike.

One note about Shanghai and the Shanghai Gold Exchange: they're on holiday, closed down for a week during Chinese New Year celebrations - the year of the Horse.  The actual date is tomorrow, January 31 2014.



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