PM Daily Market Commentary - 5/1/2014

By davefairtex on Thu, May 1, 2014 - 10:28pm

Gold was down -6.40 to 1284.70 on moderately heavy volume; silver was down -0.13 to 19.05 on moderate volume.  Gold started sinking a bit in asia and then early in London it sank harder, bottoming at 1277 right before the NY open.  Silver followed gold, and had a particuarly nasty spike down at 0804 EDT, hitting 18.68 before rebounding, stopping out a large number of silver longs.

Shorts have firm control of silver right now - the COMEX buyers just aren't showing up - so these downspikes happen whenever the shorts push a bit harder.  Buyers might briefly buy spikes down, but there really is no follow-through.  After its pounding today silver managed to crawl back above 19 - just barely - but the trend is still down.  If 19 fails, the next stop is the June 2013 lows of 18.  Silver's bad behavior has moved the gold/silver ratio to a new multi-year high of 67.46.  This means that silver is behaving worse now than it did during the gold smash of 2013.

The dollar closed almost flat, +0.01 to 79.57.

GDX closed down -1.33% on light volume, and GDXJ was off -2.38% on heavy volume.  Both GDX and GDXJ are below all of their moving averages, and have fallen below their recent consolidation areas.  While the miners haven't had any particularly bad days recently, the overall chart pattern is pointing downhill.  Right now, it doesn't look good.

Shanghai's website didn't update today - today is Labor Day and so the gold exchange was closed.

The US equity market closed flat; it tried to make a new high and failed, but volume was only modest.  Perhaps it just needed a rest after 3 straight up days.

Bonds went nuts today, with TLT up +1.07% breaking out to yet another new high.  20 year treasury rates are now at 3.16, the lowest they've been since June 2013.  The breakout in bonds would seem to suggest bad news ahead, but so far, it hasn't seemed to affect the overall equity market.

This is what a bullish trend looks like - moving averages acting as support, price above all 3 averages, and so on.  The corrections right now are lasting only a few days, and don't even dip below the 20 EMA.



davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687
gold rally

Well I can't tell you why - but after getting a beat-down this morning at the time of the nonfarm payrolls report (spike down to 1272 stopping out the usual collection of COMEX longs at 0830 EDT) gold has since come back and after about 1025 EDT it broke out and is now above 1300 and looking quite strong.  Silver's intraday chart formation doesn't look quite as strong, but as a percentage gain silver is doing quite well.  For a change.

Again, what happened about 1025 this morning to cause the reversal?  I don't know.  It wasn't one massive spike.  But whatever happened, its got PM on fire.  If silver can close above its 20 EMA (19.64) - something it hasn't been able to do since mid-March - yesterday may have been the low.

Perhaps the market was reading a certain silver market review and finally figured out silver was a good deal at these levels.  :-)

thc0655's picture
Status: Diamond Member (Online)
Joined: Apr 27 2010
Posts: 1714
I don't know either

Thanks for your comment and honesty Dave.  I saw the action and looked in vain for a "cause."  Is it an Irish blessing or curse? "May you live in interesting times."  'Interesting' is one word we could use for weird stuff like this.  There's A LOT going on I/we have no clue about (so far).  On my death bed I will be glad to have lived through these interesting times, but only if they are followed by 20 years of peace and quiet in retirement.  There's only so much 'interesting' I can stand.

I know you noticed, but you didn't comment.  The dollar index crashed down at the same time gold/silver flashed up.  Good grief.


davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687
trader dan: it was the ukraine

Trader Dan suggests that the helicopter shoot-downs in the Ukraine caused a whole bunch of things to jump - the buck to drop, and PM and bonds and euro to rise.

If you look at charts intraday it was this funky two hour roundtrip for a lot of things.  If peace breaks out in the Ukraine, Trader Dan thinks gold will have troubles.  Note that USD tumbled at the same time gold & silver broke higher, and bonds rallied too.  A whole bunch of charts look quite similar.

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