PM Daily Market Commentary - 1/27/2015

By davefairtex on Wed, Jan 28, 2015 - 2:48am

Gold rose +10.80 to 1292.10 on moderately heavy volume, while silver climbed +0.12 to 18.06 on moderately light volume.  Metals sold off in early asia trading, with silver suffering a particularly large (momentary) spike down in Asia that cleared out a bunch of longs, but buyers bid the price right back up and PM continued rallying into the NY session.

Gold regained most of what was lost yesterday; it was materially aided by a huge drop in the dollar.  In Euro terms, gold actually dropped today.  Still, the "correction" I was concerned about is proving to be modest, so far at least.  If gold can't be driven to close below its EMA-9 for any amount of time, that's a really bullish outcome.  Let's hope that continues.

The USD had a massive drop today, closing down -0.98 to 94.26.  This mirrors a huge move higher in the Euro, which was up +1.36 [+1.21%].  Isn't it interesting that the buck falls/the Euro rallies immediately after the Greek elections?  My guess: Euro shorts are ringing the cash register after a massive move lower, with no immediate catalyst for a further move lower in sight at the moment.  The dollar remains above its EMA-9, which is still quite bullish.  Today it formed yet another swing high, but we've seen that happen many times to no ill effect during this long dollar rally.  Perhaps this swing high will end up being "the one" that leads to a reversal.  Or at least a correction.  We shall see.

Miners did quite well, rallying from the opening bell through to the close.  GDX was up +3.30% on moderate volume, while GDXJ rose +3.74% also on moderate volume.  Traders pushed GDX back above its 200 MA, which is bullish.  It appears that traders are starting to be more afraid of missing out on low prices than they are of a miner correction.  That's a good sign.  Junior miners still look weak.  The miner ratios are sending out mixed signals, but the senior miners are looking relatively healthy right now.

SPX sold off overnight in the futures markets; a negative Durable Goods report at 0830 EST helped push prices lower, but it was a direction they were already heading.  SPX ended up closing more or less where it opened, down -27.54 to 2029.55.  VIX rose +1.70 to 17.22.  After the close, AAPL reported an unexpectedly good quarter, which seemed to push prices right back up again after hours.  Who knows where this market will end up?  If we judge based on the close, things look a bit bearish.

Long bond ETF TLT rose +0.20%, slowly edging higher.  Bonds remain in a strong uptrend, and may be in the process of breaking out to higher levels once again.

The overall commodity index ($CRB) managed to rise today, up +0.86%, but the index remains below the EMA-9 which still says "strong bearish move" to me.  Moving averages help me to resist having any unfounded hope about a possible end to a never-ending commodity bear market move!  WTIC rose +0.70 to 45.78, which was somewhat positive although any rallies in oil appear to be tough sledding right now - and this is with a big selloff on the buck, which should be oil-positive.  Oil hit 46.57 at one point intraday, but the high did not hold.  Oil equities look a whole lot better than oil, although they too remain in a downtrend.  Oil equities are a way for traders to buy "oil in the ground", which suggests the market doesn't believe these low oil prices will last long term, regardless of what Saudi oil ministers say.

I still think there is still pressure on gold to correct; gold-in-Euros fell today.  Another way of looking at this is, gold's gain priced in USD was entirely a US dollar currency illusion.  Likely, traders in Europe are ringing the cash register after the 16% golden move off the breakout that started January 2.  Still, miners look surprisingly good, and I am watching them for clues of where gold might be headed next.  If the miners can break higher, I think they'll drag gold right along with them.

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1 Comment

davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5683
FOMC announcement 1400 EST

In all the excitement, I forgot that the FOMC had a meeting - starting yesterday, with its usual announcement TODAY at 1400 EST - coming up in just 40 minutes.  I'm not sure it will be as market-moving as the ECB, but you just never know what these Central Bankers will do.

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