PM Daily Market Commentary - 10/21/2015

By davefairtex on Thu, Oct 22, 2015 - 2:44am

Gold fell -9.00 to 1166.80 on moderate volume; silver dropped -0.22 to 15.68 on moderate volume also.  Metals started selling off during the London session, and continued into the morning in NY.  A rising dollar did not help PM.  Both gold and silver closed their 9 EMAs today.

Gold finally could not resist the pull lower; it made a new low, but did not drop particularly hard.  Although it closed just below the 9 EMA for the first time in several weeks, the selling has not been as violent as it has in times past.  For now, at least, gold still seems to be holding up relatively well.  The dollar's moves higher have been mild; perhaps that has helped somewhat.

Silver's drop is starting to accelerate a bit; it has dropped further below its 9 EMA, volume is starting to pick up a little, and the gold/silver ratio is now definitely starting to rise.  Silver is leading gold down, which is the usual behavior for a PM correction.

Miners fell today, with GDX off -2.94% on moderately heavy volume, while GDXJ dropped -2.24% on moderate volume.  Miners lost much of yesterday's gains, and dropped below the 9 EMA once again.  However the miners avoided making new lows, unlike both gold and silver.  To me this is a sign of relative strength in the mining shares.  Gravity is pulling them down, but traders are still showing up to buy the dip; that, or traders are reluctant to part with their miners at this stage.  Either way, its a positive.

The USD moved slowly higher today, climbing +0.13 to 95.07.  The buck is up 4 of the last 5 days, but the moves have not been dramatic.  I'm not getting the sense that the dollar is threatening to move rapidly higher at this rate; if the buck tops out and starts to fall, that could bring a premature end to gold's mini-correction.  We just have to watch and see.

SPX tried again today for a new high and failed, but this time the bears took over towards the end of the day and pushed prices lower; SPX dropped -11.83 to 2018.94, with the descent stopping at the 9 EMA.  My computer is viewing SPX with a bit more suspicion, although it is not yet bearish.  I think a break below the 9 EMA would do it, however.  VIX rose +0.95 to 16.70.

JNK fell -0.14%, a modest move lower.  JNK remains above its 50 MA.  No signal from JNK today.

Bond ETF jumped higher, climbing +0.99% and moving above both the 9 EMA and the 200 MA on the same day.  TLT remains within its trading range, but is moving towards the top.  If equities correct, bonds most likely break higher.  This was a big move given the small move lower in equities.

The CRB fell -0.93%, an unpleasantly large move if you are a PM holder, dropping CRB below its 50 MA for the first time in a few weeks.  That's bearish for commodities, and for PM too.

No doubt part of this was WTIC, which dropped -0.66 to 45.26, finding support at its 50 MA.  Today's Petroleum Status Report released at 10:30 showed a large build in oil supplies, which should be bearish; of course oil rallied off its lows right after the release just to confound everyone.  Perhaps traders were expecting a larger build and didn't get one.  Brent is below its 50 MA and is just above 47.50 support.  Oil is starting to get interesting.  "Line in the sand" for WTIC is 44.  A close below that would be bad.  My computer is short oil.

HAA has 100 oz gold bars right now in NYC at 1193.82/oz [+2.24% over spot], and 1000 oz silver bars in NYC at 16.35/oz [+3.85% over spot].  Eagles in NYC are quoted at 19.45 [+23.59% over spot].  All premiums rose modestly today.

PM is now finally feeling the pull of gravity, but there is no serious selling just yet.  I think the story is still playing out; dollar will probably continue rising, PM will probably continue to fall, but it all seems relatively tame so far - quite different than what we're used to in the past few years.  Oil could get exciting, although that 44 support for WTIC has held for several months now.

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davefairtex's picture
Status: Diamond Member (Offline)
Joined: Sep 3 2008
Posts: 5687
ECB's Dragi sends the buck screaming higher

I wrote yesterday about the dollar's slow move higher.  Well that ended today after Dragi hinted at more money printing to come; the euro tanked and the buck jumped more than a full point; it is now up +1.09 to 96.09, knifing through its 50 MA and is now just above its 200.  Euro did the opposite - it is down -1.55% [-1.75] to 111.62.

Dollar is back to looking very strong - but in this case, because the reason has to do with the prospect for more stimulus from Dragi, gold still has a bid.

Gold is rallying hard in Euro terms, which means gold-in-dollars remains about even on the day.

Cornelius999's picture
Status: Gold Member (Offline)
Joined: Oct 17 2008
Posts: 381
Amazing work you did coming

Amazing work you did coming up with the graphical evidence of PM manipulation Dave!  We all appreciate the work you do here.

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