PM Daily Market Commentary - 3/19/2015

By davefairtex on Thu, Mar 19, 2015 - 10:19pm

Gold continued moving higher today, closing up +4.10 to close at 1170.50 on moderately heavy volume, while silver rose +0.22 to 16.11 on moderate volume.  Gold traded mostly sideways with a positive bias, while silver rallied during NY trading hours.

The continuing rally in PM after the FOMC announcement yesterday was particularly interesting given the strong snap-back rally in the buck that happened today.  Gold has moved more firmly over its 9 EMA, and the gold/silver ratio has started dropping - today it fell -0.75 and closed at 72.66, which is bullish for PM overall.

Miners took a rest today, with GDX falling -0.69% on light volume, while GDXJ rose +0.09% on moderate volume.  Often after a big up-day like yesterday there is profit taking, and today was a very modest example of that.  Mostly miners traded sideways within a relatively narrow range on light volume.  My guess is, traders are waiting to see if the dollar will continue correcting, or move right back to its uptrend.

Which brings us to the all-important dollar.  USD climbed +0.80, closing at 99.58, a large bullish move that recovered a great deal of the ground lost yesterday.  The dollar is back above its 9 EMA and is really not far at all from its previous high.  The Euro lost almost all of its gains from yesterday's post FOMC rally, closing down -2.13 to 106.54.  There looks to be a very strong bid under the buck - buyers bought the dip with a vengeance today.  Given that, I'm not sure we will see any substantial correction.

I'm constantly being surprised by this market.  The uptrend in the buck is there for a reason.  We can speculate what that reason might be, but today's move illustrates that whatever the underlying reason is, whatever is powering the uptrend has not dissipated even after this very long run higher.

US equities (SPX) fell today, dropping -10.23 to 2089.27.  Recent pattern: large up day followed by a small down day.  Repeat for three days.  Today was the small down day.  VIX rose +0.10 to 14.07.  Nobody is particularly worried about SPX moving lower.  SPX has gone mostly nowhere this year so far from our perspective (up 1%) while the dollar has risen almost 9% over that same period.   SPX in Euros: up 14%.  From the European perspective, they can get the currency gain, the dividend, and whatever modest move SPX can churn out.  Perhaps that is who is "buying the dip" in SPX.  Sure beats a guaranteed negative return in your bank account in Europe.

Still, I'm watching some of my favorite macro indicators deteriorate, and when that has happened in the past, market prices generally move lower.  I'm not sure we're there yet, but "there" does seem to be getting closer.

Long bond ETF TLT also retreated somewhat, dropping -0.51% but remaining above its 50 MA.

The CRB (commodity index) dropped -0.50%; as we know, commodity prices don't very much like a strong dollar.

WTIC fell after yesterday's rally, dropping -1.22 to close at 45.61, moving back below its 9 EMA.  Oil is also having trouble with that strong dollar.

It looks like PM really wants to rally.  My only question: will the dollar permit it to do so.

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