PM Daily Market Commentary - 9/16/2014

By davefairtex on Wed, Sep 17, 2014 - 12:47am

Gold closed up +1.80 to 1235.60 on moderately heavy volume, while silver was up +0.02 to 18.69 on moderate volume.  PM spiked higher twice - once in London trading as the dollar started to move lower, and again after several news article hit the wires at 1130 EDT regarding more stimulus from China, a Ukraine settlement proposal, and a Jon Hilsenrath prediction suggesting the Fed would lean towards dovishness in its FOMC statement tomrrow.  While gold spiked to 1243 and silver 18.88, neither metal was able to hold its gains into the close.

Full points to the news source - they included charts that showed clearly how the markets reacted to the news.  The big jumps in AUD and copper intraday suggests to me that the news from China was seen as significant:

After the trio of news stories hit, the dollar sold off, dropping as low as 84 before rebounding, ending the day down -0.15 to 84.22.  The partial rebound in the buck coincided with the failure of PM to hold its gains - from these intraday price moves, it seems that gold is awaiting a conclusive top in the buck before COMEX futures traders will have enough confidence to buy and hold through end of day.

Tomorrow we have the FOMC meeting statement at 1400, and the Chair press conference at 1430.  What is the market predicting?  Its hard to say.  The buck has been tracking sideways for a week; I'm guessing the market is waiting for the Fed before either moving higher or correcting.  And with gold inversely tracking the buck right now, gold's fate is tied up with what happens at FOMC.

GDX closed up +0.38% on moderate volume, while GDXJ was up +1.50% on moderately heavy volume.  GDX was down early, rallying strongly along with gold at 1130, and then dropping into the close as gold failed to hold its gains.  GDXJ showed a similar pattern, but held on to more of its gains, looking more bullish but still not all that strong.  The GDXJ chart is the most bullish in the PM space, and its breakout above consolidation seems tentative.

There was nothing tentative about SPX, which rose +15 to 1998.98.  It started moving modestly higher at the open, and really took off at 1130, closing near the high.  VIX dropped hard, down -1.39 to 12.73.

Long term treasuries (TLT) dropped -0.41% today, making a new cycle low and is quite near a support level at 113.  Likely the FOMC meeting will cause a move in one direction or another, but since I don't have a crystal ball I have no idea which way it will go!  That said, I could easily see a rally from here - TLT is off about 6% from its peak at the end of August.

Commodities actually rallied today up +0.32%.  WTIC had a fantastic day, up +1.92 to 94.71, while Brent was up a smaller +1.17 to 99.05.  WTIC broke its downtrend line and also drove through its 20 EMA - all signs of a possible rebound.  We've seen that before in WTIC, but "this time its for real" - the pattern just looks more bullish to me this time.  Copper also did quite well, up +2.28%.

I think the potential is there for a significant rally in the commodity space post FOMC - prices have been driven down pretty consistently over the past few months in commodities, oil, silver and gold, and the buck is seriously overbought.  Now we just need to get the market to cooperate.

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Arthur2014's picture
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"Why ECB QE Is Bearish For Gold Prices"…old-prices.html

Why ECB QE Is Bearish For Gold Prices

Monday, September 15, 2014 at 06:08AM

"... Given a new QE program by the ECB that is bearish for gold, a Federal Reserve that stands ready to increase interest rates next year and a very weak technical picture we continue to hold the view that gold and silver prices are currently at unsustainably high levels. The next big support for gold is at $1180 and this could be tested very soon should Yellen have a hawkish tone. Whilst gold and silver could have a small bounce from these levels we think that any attempt to move higher will be feeble and short lived, therefore this is move to be faded and used to add or initiate short positions. Over the medium term we see gold trading down to $1030 and therefore we will most likely maintain a core short position until that level is reached."

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
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Posts: 3936

Reading the runes will be the ruin of me.

sand_puppy's picture
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Posts: 2074
Today's gold drop

Dave (and Chris, Charles -- the financial gurus)

What is behind todays impressive gold drop?

It doesn't affect me directly personally as I am a simple long term accumulator of physical metal.  But I assume it is an indicator that big money is moving.



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