PM Daily Market Commentary - 9/30/2015

davefairtex
By davefairtex on Thu, Oct 1, 2015 - 3:10am

Gold sold off again today, dropping -12.40 to 1114.50 on heavy volume, while silver fell only -0.12 to 14.48 on moderate volume.  Gold sold off steadily starting in Asia through to NY, while silver moved mostly sideways, but trailed off into the close in NY.

The buck rallied strongly for most of the day; that probably didn't help gold much at all.

You can see that gold failed to break the downtrend line in a convincing manner, and this failure has resulted in four days of selling culminating in a close below the 50 MA.  A test of 1100 seems likely within a day or two.  If 1100 fails, then we will head to 1080.  Gold is looking weak now.  Only about half of the move today could be attributed to a currency effect.

Silver made another new low today; it is slowly creeping lower, unlike gold which seems to be headed rapidly downhill.  Silver may have found some support at the 14.50 level; part of that is probably due to copper's huge rally today: copper printed a swing low and climbed +3.70% on heavy volume.  If copper continues to do well, it may keep silver from moving lower.  Over the long term, silver and copper tend to influence one another.

Miners surprisingly rallied today, with GDX up +2.46% on light volume, while GDXJ climbed +1.61% on moderate volume.  Why did miners rise when gold did so poorly?  I think the answer lies with SPX; intraday, mining shares tracked what happened in SPX more than anything else.  Since some of the larger miners are members of the S&P 500 index, when the index climbs, that will automatically put at least some sort of bid under the larger miners.  Sometimes that helps, other times the selling pressure overwhelms it.

The USD climbed steadily all day long, ending the day up +0.49 to 96.48.  The buck seemed to be aligned with the move in the equity markets; a steady move higher in the buck in Asia and London paralleled a similar move higher in the e-mini futures at that same time.  The buck managed to close above its 50 MA today, and a breakout above the high set a few days back will indicate a continued rally in the dollar.  This will be problematic for PM.

SPX confirmed that strong doji candle from yesterday and rallied strongly today, closing up +35.94 to 1920.03.  Much of the move came overnight in the futures markets; perhaps its sneaky manipulation by the authorities, or maybe its just the computers tracking the rising equity markets from the rest of the world.  (My vote is the latter).  VIX fell -2.33 to 24.50.

JNK rallied today along with the equity market, but the rally was exceptionally weak, with JNK climbing only +0.28%.  JNK is not looking healthy; it is not signaling a return to risk the way the equity market is suggesting. 

Bond ETF TLT fell -0.35%, a very mild move given equity market strength.  Perhaps some of the money flowing into the US kept bonds from selling off too hard.  I'd interpret this move today as positive for bonds.

The CRB (commodity index) rose +0.10%; the feeble rally is partially explained by strength in the buck, and doesn't materially improve the bearish-looking CRB chart.

WTIC was all over the map today, but ended up +0.45 to 45.34.  The Petroleum Status Report showed a build of 4.2 million barrels, which is generally bearish, but gasoline demand year-over-year is up 4.2%, which is bullish for oil longer term.  Oil managed to climb back above its 50 MA, but it stil remains in a descending triangle pattern.  Oil needs a close above 48 to convincingly signal an end to the current sideways move.

HAA has 100 oz gold bars right now in NYC at 1136.90/oz [+2.27% over spot], and 1000 oz silver bars in NYC at 15.09/oz [+3.88% over spot].   Eagles in NYC are quoted at 20.22 [+39.16% over spot].  Premiums on the big bars are higher, as are Silver Eagle premiums.

Gold is now looking distinctly bearish; four straight days of selling will do that to a chart.  Whatever impetus that propelled gold higher last week is no longer present.   Silver looks weak also, but isn't heading lower as fast as I had feared; today's big rally in copper might be helping silver to stay afloat.  SPX has marked a swing low, but much of that is probably short covering; how long the rally will last is hard to say.  Trend in equities remains down.

My computer has marked a short term reversal for SPX (daily timeframe).  Looking out 2 months, it doesn't see too much more downside for SPX at the moment.  Perhaps as more macro data comes in, it will change its mind.  On that note, Atlanta Fed boosted 3Q GDP estimate to 1.8% - not spectacular but not recessionary either.  Employment is still strong, industrial production hasn't collapsed (although its at risk because of shale), retail sales and personal income look good; perhaps that is why my model is not pessimistic about SPX right now.

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2 Comments

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 922
Palladium and gold

I'm actually expecting Palladium to soar up to meet gold's price, even as gold continues downwards.

https://plus.google.com/100878744216713640609

However, I couldn't give a probability on my expectations being fulfilled.

Michael_Rudmin's picture
Michael_Rudmin
Status: Platinum Member (Offline)
Joined: Jun 25 2014
Posts: 922
Palladium and gold

I'm actually expecting Palladium to soar up to meet gold's price, even as gold continues downwards.

https://plus.google.com/100878744216713640609

However, I couldn't give a probability on my expectations being fulfilled.

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