PM Daily Market Commentary - 3/7/2016

By davefairtex on Tue, Mar 8, 2016 - 1:26am

Gold rose +7.90 to 1268.00 on heavy volume, while silver climbed +0.09 to 15.65 on moderately heavy volume.  PM mostly tracked sideways today with an upward bias; no new highs were made.

Gold wasn't the big story today, oil was.  It jumped +1.65 [+4.54%] to 37.98, clearing an old previous high and generally confirming the double bottom, overcoming warnings of massive supply gluts and the like.  Brent oil is back above 40, having climbed 48% over the past 6 weeks.  Notice that oil has rallied in the face of almost overwhelming bad "fundamental" news; its not that the supply glut is over, yet prices are moving higher.  Can you imagine if gold had risen 48% in six weeks time?

Either this is a massive head-fake, or there is some news that just hasn't made it out into the public arena just yet.

Gold seemed to have a strong bid at the 1260 level today.  I can almost draw a line at 1260 and you can see very few moves below that price level on an intraday chart.  Someone is out there buying those COMEX contracts.  No change in GLD tonnage today.

Unless something changes, I'd expect gold to re-test the 1280 level in the next few days.  While we saw a lot of selling on Friday, there was no follow through to speak of today.  That's bullish.

Silver managed to move higher today too, although its back to underperforming gold again, albeit just slightly.  The next target for silver is the previous high at 16. 

Miners ignored Friday's failed rally, with GDX up +3.50% on heavy volume, while GDXJ rose +4.72% on very heavy volume.  Miners are back to outpacing gold once again.  That bearish MACD crossover for GDX has been invalidated by today's rally; momentum on MACD is now pointing higher once again.

Platinum rose +2.14%, palladium shot up +4.72%, and copper was up +0.69%.

The buck fell -0.26 to 97.08, stopping its descent right at the 200 MA.  The falling dollar is generally good for commodities and PM.

SPX eeked out a small gain today, up +1.77 to 2001.76, but that concealed some big divergences; XLE rose a big +2.35% on the day, while tech and consumer staples fell -0.61%.  That's pretty unusual, and it is generally not so bullish.  Today's SPX modest rally was entirely about commodities.  VIX rose +0.49 to 17.35.

TLT fell -0.03%; bonds continue to trend lower, although today's move was quite minor.

JNK rose just +0.09% - an unimpressive move given the dramatic pop in oil and the commodities.  This suggests to me that the JNK rally may be approaching a near term high.   No wonder PIMCO said it was time to buy JNK.  They really do need your help!  Risk on may be weakening.

CRB popped strongly today, up +1.87% and confirming its double bottom.  This is the second strong rally day by the commodities, and we are finally beginning to see some real movement higher.  Copper has been strong for weeks, as has oil, and the overall commodity complex is just now starting to materially respond.

Miners are still the best thing in the PM space, followed by gold, and then silver bringing up the rear.  Bid remains under gold - the point at which the buyers appear is well above the 9 EMA, which feels quite bullish to me.  As I have mentioned before, gold is now rallying independently of whatever oil is doing, what the US equity market is doing, what the dollar is doing - gold is just moving higher.

As far as I can tell, its not about shortages, or China buying (they're selling, not buying, at least at these prices), or impending COMEX defaults.  None of the usual goldbug storylines appear operative at the moment.

The catalyst: I'm thinking it was negative rates by the BOJ.  That's what the price chart suggests, anyway.  Immediately after that event, price blasted through the 200 MA and it just never looked back.

It will be fascinating to see what gold does if and when the ECB decides to drop rates further into negative territory.

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1 Comment

Penny551's picture
Status: Silver Member (Offline)
Joined: Nov 8 2012
Posts: 154

Either this is a massive head-fake, or there is some news that just hasn't made it out into the public arena just yet.

I suspect that is precisely the case.  By my exact calculations, there are eleventy thousand and four possible geopolitical scenarios in MENA that could soon disrupt the oil market that us pee-ons will not hear about in the news until after the fact (Price/Vol=greatest leading indicators), and even then the story will be greatly distorted.  I'm sure it will involve fighting them there terrorizers.

Thx for the great write-up!

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