PM Daily Market Commentary - 6/6/2016

By davefairtex on Tue, Jun 7, 2016 - 2:10am

Gold rose +1.20 to 1247.70 on moderate volume, while silver climbed +0.05 to 16.49 on moderately light volume.  Both metals traded in a fairly narrow range; there was some turbulence during Yellen's congressional statement where she expressed the sense that a rate rise was still possible, but price recovered relatively quickly.  "It's only one jobs report."  This of course means the market will be on pins and needles waiting for the next one.

So far, at least, the futures markets have not changed their assessment of a rate rise at the June meeing.

On the chart, gold managed to creep back above its 50 MA, which is mildly good news.  What didn't happen was any profit-taking after Friday's big gain.  Of course, gold didn't race higher either.   In truth, not much happened.

Similar to gold, silver managed to squeak back above its 50 MA - by a penny.  It is an improvement, but a very modest one.  There was not much change in silver today either.

Miners did a little better, with GDX up +0.47% on moderate volume, while GDXJ climbed +1.77% on moderate volume also.  The enthusiasm of the junior miners is the most positive sign for PM.  Intraday, both miner groups saw some early selling right at the open, but the morning dip was bought, and at end of day prices rallied into the close.  It felt fairly bullish to me, especially after such a mammoth gain on Friday.

Platinum rose +0.91%, palladium climbed +0.77%, and copper fell -0.14% printing a "northern doji" - which looks a lot like a shooting star/failed rally to me.  We don't need to see copper top out here; I think silver would not be happy if that happened.

The buck continued falling, losing -0.14 to 93.89, making a new low.  The pound did poorly, losing its Friday gains and dropping -0.50%.  More polls came out showing an increased lead for BRExit.  I wonder what sorts of voting machines England has, and how desperate Brussels is to have the UK "Remain" attached to the boat-anchor EU.  Various members of the UK parliament are hinting that they will act to override any "Leave" vote, ignoring the referendum.  A majority of parliament members prefer to Remain, while it appears that a majority of the voters would prefer to Leave.  Things are getting interesting.  Armstrong thinks that if UK does exit, the Euro will get hammered due to contagion and that the pound will most likely recover.  That would likely lead to a large dollar rally, as money would flee Europe ahead of a possible break-up.

WTIC rallied nicely, up +0.81 [+1.66%] to 49.71, seemingly setting up to re-test the 50 level once again.  Perhaps today's rally was a delayed effect of the big dollar move on Friday.  The bid underneath the oil market has been quite strong, with every intraday dip being bought over the past four days.  The oil services equities had a particularly good day, with the services ETF (OIH) screaming up a huge +7.17%.  Something startled the horses in the energy services sector; I'm not sure what it was, but it bears watching.

SPX rallied +10.28 [+0.49%] to 2109.41, making a new high.  Today was all about energy (XLE:+2.21%) and materials (+1.03%) with utilities (XLU:-0.14%) bringing up the rear.  It looks like we are back to being driven higher by commodity-related equity prices.  VIX rose +0.18 to 13.65.

TLT fell -0.74%, printing a swing high and signaling risk on.

JNK broke out to a new high, closing up +0.48%.  JNK yields 6.3%.  Quick, buy before they run out.  SPX will probably not sell off if JNK continues to rally.  Risk on.

CRB also broke out to a new high, up +1.38%.  CRB is now starting to go vertical.  Today's move was about energy & agriculture.

To me it appears that PM is still poised for a continued move higher.  It seems likely that rates will hold steady for now, and that's bullish for gold and silver.  We might even see an oil breakout above 50, and that certainly couldn't hurt.

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