PM Daily Market Commentary - 3/30/2015

By davefairtex on Tue, Mar 31, 2015 - 7:01am

Gold fell -12.50 to 1185.80 on moderate volume, while silver dropped -0.27 to 16.62 also on moderate volume.  PM sold off steadily for most of the day - the dollar rose steadily for most of the day.  Cause and effect.  Gold closed below its 9 EMA, which is a danger sign.  Silver managed to avoid this fate by a very slim margin.

Gold's drop today found little support at the 9 EMA, and from what I can tell, further moves up in the buck will lead to more selling in gold.  The only slight bit of good news is that the volume on today's sell-off was not particularly high, so traders are only bailing out slowly rather than quickly and all at once.

Miners sold off today, dragged lower by the drop in the price of gold.  Since gold's entire decline happened prior to the NY market open, miners opened down but then more or less traded sideways all day.  GDX was off -1.96% on moderately light volume, while GDXJ fell by a larger -3.22% on moderate volume.

The drop in GDX is good news of a sort - we could have seen massive selling, the way we did last time after gold broke lower, but the senior miners just traded sideways.  That's not a bad outcome.  This time, selling looks a bit tepid - and that's good to see if you're a bull.  However if the buck keeps climbing, gold and the miners will likely continue to sell off.

The dollar rose +0.76 to 98.28 today, a big move higher, confirming the low made last Thursday, recrossing its 9 EMA, and generally appearing as if it is ready to resume its uptrend.  Correction in the buck may be over.  If so, gold will most likely suffer.

SPX shot higher day, the rally starting in the futures markets in Asia and London and then continuing in NY almost through to the close.  By the end of the day, SPX was through its 50 MA, through its 9 MA, confirming the low marked on Thursday.  SPX still needs to clear its old high to be out of the woods, but the buyers definitely showed up.  Buy the dip remains in force.

Bonds sold off, with TLT down -0.50, dropping slightly below its 9 EMA but remaining above the 50.

The CRB (commodity index) continued falling, dropping -0.42%.  Commodities do not generally like a stronger dollar.

WTIC bucked the trend a bit, closing +0.29 to 48.72, rising almost to its 50 MA.  Oil traded largely sideways within a range today and printing a doji, which is actually a positive outcome given the strength in the buck.  Possibly that's about Saudi Arabia bombing people they don't like in Yemen.  There's nothing like a brisk fight near the straits of Hormuz to get oil traders to buy.

Last week I posed the question: would miners lead us lower?  It looks like they were indeed the "tell" - gold is now following the miners downhill.  How long this correction goes probably depends on moves in the buck. 

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