PM Daily Market Commentary - 6/30/2015

By davefairtex on Wed, Jul 1, 2015 - 2:02am

Gold fell -7.50 to 1172.10 on moderately heavy volume, and silver dropped -0.09 to 15.66 on heavy volume. Both metals sold off, with both gold and silver making new cycle lows just after 11:00 EDT, after which both rebounded substantially, although the bulk of the rebound lasted only about an hour or two.  There appear to be buyers at COMEX for gold below 1170 and for silver below 15.50, but they seem unwilling to chase prices higher.

The dollar rose substantially today, which definitely put pressure on gold.

The new lows for gold invalidated Friday's potential swing low.  We remain in a downtrend.

Lots of pressure remains on silver right now; the downtrend line is unbroken, new lows were made and although COMEX buyers appeared once prices broke below 15.50, the daily closing prices continue to fall.  I expect the market to turn based on the COT report, but we need to wait until the market shows its hand.  It could be tomorrow, or it could be two weeks from now.  Patience.

Mining shares fell once again, with GDX dropping -0.78% on moderately light volume, and GDXJ down -1.27% on moderately light volume also.  Both junior and senior miner ETFs made new lows today, with the senior miners slowly moving closer to lows set back in March.  Its a slow-motion miner crash, with prices just dribbling lower and lower each day.

The dollar recovered today, rising +0.71 [+0.75%] to 95.66, closing just above its 50 MA for the first time in five weeks.   My guess is, the dollar will continue moving higher unless we get some more permanent resolution to the Greek situation.  It is fascinating to me how the Greek government is more or less ignoring the "deadlines" and continuing to propose solutions.  Default on a payment to the IMF?  That's the IMF's problem, not Greece's problem, all the while saying, "you can't kick us out of the Euro, it violates the EU treaties."

SPX (US equities) tried recovering today but largely failed, closing up +5.47 to 2063.11.   SPX made a new low on the day.  It looks like there are a few buyers down here near the 200 MA.  The VIX fell -0.62 to 18.23.

Bond ETF TLT dropped -0.69%; yesterday's rally was strong, but bonds will have to do a lot better than this to stage any sort of reversal.  Bond trend remains down.

The CRB (commodity index) rocketed higher, up a big +1.60% driven mainly by a big move higher in agriculture products.  Wheat, corn, soybeans have all staged big rallies over the past week, with corn up 10% just today!  This is much more about supply/demand issues than inflation expectations, but rising ag prices won't hurt PM. 

WTIC (west texas crude) rose +0.82 [+1.41%] to 59.09, trying but failing to rise back above its 50 MA.  Brent has been weakening now for the past few months, so far it refuses to break down below 62.  Brent rose +1.12 to 63.16.

The other two precious metals, platinum and palladium, are not doing well.  Platinum has been underperforming gold and has dropped below its March lows, while Palladium has simply fallen off a cliff in the past month and is down 20%.  Copper has started to move sideways instead of down in the past few days, so that's good news - well perhaps it is just an absence of bad news.

There are a lot of forces in play here; weakening (Brent) crude prices, related metals haven't done so well, the pop in ag prices might be helpful, but the historically weak summer months (June/July) are proving to be weak for gold.  Apart from Greek-driven flight to safety - and we're not really even seeing much of a flight to safety in the dollar right now - COMEX gold doesn't appear to have much of a catalyst at the moment.  Price levels to watch: 1140 for gold, and 15.25 for silver. 

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