PM Daily Market Commentary - 5/4/2015

By davefairtex on Tue, May 5, 2015 - 7:17am

Gold rose +10.10 to 1187.30 on moderate volume, while silver rose +0.27 to 16.40 on moderately heavy volume.  By closing above Friday's high, gold printed a swing low, which may indicate a trend reversal.  Silver rallied very strongly intraday but was unable to keep its gains into the close.

Overall the PM picture looks a bit confused, but gold's swing low is a hopeful sign, especially since the dollar rose also.  Gold in Euros also printed a swing low.  I feel that most of the important price action for gold these days is in Europe, not the US - the Euro/Gold charts look a lot more orderly and regular than the ones in the USD.

GDX rose +0.64% on light volume, while GDXJ climbed +2.64% on moderate volume.  Miners continue their move higher, with the junior miners finally catching up to the seniors.

I have been talking about miner outperformance for a while now: you can see it visually in the ratio chart below.  When the ratio rises, it says the miners are outperforming gold.  Ratio is now almost back to its highs dating back to the beginning of 2015.

The dollar rallied for the second day, rising +0.19 to 95.64, marking a swing low after falling 6% over the last three weeks.  The rally doesn't look too strong at the moment, however; we will have to see if this is more than just a brief bounce.

SPX (US equities) rallied today, climbing +6.20 to 2114.49.  The market rallied early but was unable to hold its gains, selling off slowly through end of day.  Equities are only a few points away from yet another all time closing high.  VIX rose +0.15 to 12.85.  I've noticed that gold sometimes weakens when money moves into equities.  If we put in a top in the equity market, it might help gold as a side effect.

Bond ETF TLT fell hard today, dropping +0.94% and making yet another low for this cycle.  TLT is approaching its 200 MA, with no bottom in sight.  Money seems to be fleeing longer term bonds right now.

The CRB (commodity index) fell -0.05%, more or less unchanged on the day.  Commodities have been in a gentle uptrend for the past six weeks. 

WTIC (west texas crude) fell -0.24 to 59.02.  The uptrend in oil appears to be losing a bit of momentum after its seven week rally.  I would not be surprised to see oil correct here.

Gold may have put in a low here, but it is hard to say.  Things look a little clearer when viewed in Euros.  While we don't have an inflationary picture, it does appear that price deflation is abating somewhat.  That should help gold and silver.

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