PM Daily Market Commentary - 7/23/2014

davefairtex
By davefairtex on Thu, Jul 24, 2014 - 4:11am

Gold closed down -3.40 to 1304.70 on light volume, and silver was down -0.06 to 20.95 also on light volume.  Volume and trading ranges for both metals are shrinking every day, which is a trading pattern known as a volatility squeeze.  It sounds unpleasant, but it really just reflects trader uncertainty as to market direction.  This pattern often ends in a big move - in either direction.

The USD moved higher again today, up +0.04 to 80.89.  Over the past 10 trading days, the buck has been up 9 days.  Last week we saw a golden cross for the dollar, as its 50 MA crossed over its 200 MA to the upside.  In the medium term, the dollar is now looking stronger; this should lead to money flowing into US assets, and at least some pressure on the price of gold.

So if we look to the miners for direction - GDX was down -0.38% on light volume, while GDXJ was down -1.31% on moderate volume.  GDX:$GOLD still looks strong, while GDXJ:GDX is starting to fade a bit, dropping below its 20 EMA just today.  Gold/silver ratio continues looking bullish.  So with 2 of 3 ratios looking bullish, our miners are currently suggesting things still seem ok, although GDXJ:GDX is starting to weaken.

Another all time closing high for SPX today, closing up +3 to 1987.  VIX dropped to 11.52.  VIX has been a decent buy (for a trade) on moves below 11, but we're not there just yet.

Long term treasuries (TLT) dropped a bit, closing down -0.13%.  20 year US Treasury rates are now at 3.00%.

Brent crude was up +0.70 to 108.03 - still trading sideways within its 107-108.50 trading range.

 

1 Comment

davefairtex's picture
davefairtex
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5412
gold breakdown to 1290

Gold broke through support this morning - the previous low of 1292.60 - flushing a number of longs.  If we can get back above 1300 today, this could mark the low.  Otherwise odds are we'll probably drop a bit more until we hit support at 1280.

Lets see if the buyers at COMEX appear on this morning's move down.

If gold does break down further [uh, it just did - what great timing] if you are in the market to pick up some mining shares, you might start making your list of stuff you'd like to buy once we see a reversal.

 

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