PM Daily Market Commentary - 4/30/2015

davefairtex
By davefairtex on Fri, May 1, 2015 - 4:33am

Gold fell -20.60 to 1183.50 on heavy volume; silver dropped -0.43 to 16.11 also on heavy volume.  PM basically fell off a cliff immediately following a surprisingly positive Jobless Claims report and an inflationary-looking Employment Costs Index, both of which were released at 08:30 EDT.

The buck rallied at 08:30 also, but the rally later failed, and the USD closed down on the day.  Why then did the price of gold remain depressed through end of day even after the buck continued dropping?

Gold in Europe continues to look weak - incredibly weak today.  Gold in Euros dropped -2.57%, or about $30.

GDX dropped -2.94% on heavy volume, while GDXJ fell -3.07% on moderately heavy volume.  In spite of the big drop today, both mining ETFs remain comfortably within their uptrends.  In fact, GDX printed a relatively positive-looking almost-hammer candle, indicating a decent bid underneath the miners.  A bad candle would have been a big red candle with a close at the low.  GDX even remains above its 9 EMA.  Until we drop below that uptrend line, the bullish picture for the miners remains intact.

The dollar fell again today, the 7th day in a row, dropping -0.61 to 94.71.  The tone in the dollar has clearly changed over the past three weeks.

The Euro rose +0.88% to 112.20, stopping just above an important resistance zone from 112 to 114.  Money is now leaving the buck and returning to the Euro.  Is it renewed inflation in the Eurozone, an expected positive outcome from the Greek situation, or maybe just a relief rally?  Euro is getting overbought - if this isn't a fundamental change, its likely this 3-week move will top out relatively soon, which means the buck will likely rally once more.

SPX (US equities) sold off hard today, dropping -21.34 to 2085.51, closing below its 50 MA.  SPX fell for most of the day, and its fall did not appear to be triggered by any particular report or release.  That said, the general rhythm of today's SPX move lower was aligned with the drop in the buck.  VIX rose +1.16 to 14.55.  A close below 2070 is dangerous for equities, and a close below 2040 and the selling could become general.

The volume pattern for SPX is starting to hint at a distribution pattern - down days are higher volume than the up days.  That's a bearish sign.

Bond ETF TLT rallied +0.17% today, potentially putting in a low for bonds.  I'd guess the future of bonds will be decided by where the equity market ends up going.

The CRB (commodity index) had another good day, rising +0.97% and approaching a high from the week of February 9th.  CRB likes a dropping dollar.

WTIC (west texas crude) rose too, climbing +1.24 [+2.12%] to 59.77, conclusively breaking above its recent consolidation zone reaching price levels last seen in early December 2014.  Is it the dropping dollar, or the relatively small oil build from yesterday's Petroleum Status report?  Or maybe it is both.

We have an odd divergence going on here.  Gold and silver both look relatively weak, while commodities continue to recover.  Miners look strong, the dollar looks weak, and yet gold is having a difficult time making progress.  My only thought: this is a continuing unwind of a Grexit safe haven trade.

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