PM Daily Market Commentary - 4/7/2014

davefairtex
By davefairtex on Tue, Apr 8, 2014 - 1:48am

Gold closed down -5.40 to 1296.90 on light volume, while silver was down -0.09 to 19.86 on very light volume.  As suggested by the volume, trading in PM was pretty lackluster today - not much happened of note.

The dollar sank, closing off -0.22 [-0.28%] to close at 80.33, right down to its 50 day MA.  Its possible this recent move higher by the buck was a "false breakout" - kind of like what happened with the SPX a couple days back.  Prices broke higher, but not enough traders wanted to buy the breakout, which led to selling.

Which brings us to SPX, which was off -20 today on some heavy volume.  It is right at an important support level at 1840, and as I pointed out, it has had a false breakout - a headfake higher, only to be met with pretty decent distribution last Friday and today.  A break below 1840 support could lead to some pretty ugly moves.  Support at 1840 should be strong - it also includes the 50 day MA at that same level.  But the selloff in the high fliers, the distribution, and the Nasdaq underperforming SPX all point to a weak market.  And in the past, weak SPX has led to traders buying gold so...if SPX breaks down, we might see some money flow into PM.

GDX was flat today, closing unchanged on light volume.  GDXJ sold off, dropping -2.24% on moderate volume.  GDX tried moving higher today but it failed and dropped back to flat on the day.  The selloff in GDXJ strikes me as a somewhat bearish signal - the ratio GDXJ:GDX is showing "risk off" right now for PM.

The whole gold bounce off 1280 hasn't seemed particularly enthusiastic to me.  We had one good day for gold on Friday but that's about it.  I'm not feeling like I really want to back up the truck and buy here, things just feel too tentative - "no signal" just about sums it up.

The one bit of positive news is that copper was hammered, dropping down to 2.97 before rallying back strongly.  Its quite a positive sign for me when that happens - that's the sign of the COMEX buyers showing up in force.  Theoretically this should help silver.

[EDIT]

Of course immediately after I post this, I see that PM has broken higher - silver above 20 and gold punched above today's high to 1305.  "Post overtaken by events."  But of course we have to see how gold is treated in London before celebrating...they don't seem to like gold in London very much, for some reason...

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