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PM Daily Market Commentary – 1/17/2019

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  • Fri, Jan 18, 2019 - 06:19am

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    davefairtex

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    PM Daily Market Commentary – 1/17/2019

Gold fell -1.87 [-0.14%] to 1296.70 on moderate volume while silver fell -0.06 [-0.42%] to 15.55 on moderate volume also. The buck was virtually unchanged [+0.02%], but SPX moved higher [+0.76%] along with junky debt [+0.26%] and copper [+0.99%].

Market-moving news today was a rumor that the US was considering easing tariffs during negotiations, an idea allegedly floated by Mnuchin, but opposed by Lighthizer. This was quickly denied by the Administration, but the pop in stocks on rumor alone suggests a fairly strong potential for a rally if and when any actual positive news breaks. https://www.cnbc.com/2019/01/17/stock-market-morgan-stanley-and-netflix-earnings-china-and-brexit-in-focus.html

Gold mostly chopped lower in a narrow range today; the short black/NR7 was unrated, while forecaster dipped slightly but remained in an uptrend. Gold remains in an uptrend in both currencies, and all timeframes. If there is a trade settlement, I’d expect gold to sell off, at least to some degree. Likewise, any move towards more rate increases would probably be bad for gold also.  For now, the pennant pattern remains in play.

COMEX GC open interest rose +9,382 contracts.

Futures are showing a 1% chance of an increase in March, and a split in December (5% cut, 22% increase). Market is tilting more towards an increase once more.

Silver moved generally lower, making a new low; the spinning top was neutral, while forecaster dipped a bit but remained in an uptrend. Silver is below its 9 MA, and in a downtrend in the weekly timeframe, but remains in an uptrend on the daily and monthly.  Silver is definitely looking weaker than gold at this point – and the fact it didn’t rally with the other metals is not a great sign.

COMEX SI open interest rose +1,887 contracts.

The gold/silver ratio rose +0.25 to 83.12. That’s somewhat bearish.

Miners moved slightly higher; GDX rose +0.29% on light volume, while GDXJ moved up +0.26% on light volume also. XAU was largely unchanged, down -0.01%. XAU’s short white/spinning top was unrated, and forecaster remained deep in a strong downtrend. XAU remains in a downtrend in all 3 timeframes. Miners don’t look all that great right now; the last two days have looked like a low-volume dead cat bounce.

The GDX:$GOLD ratio rose +0.44%, while the GDXJ:GDX ratio fell -0.03%. That’s slightly bullish.

Platinum rallied +0.48%, palladium jumped +2.58% to another new all time high once again, while copper rallied +0.99%. It was another good day for the other metals. This supports the China tariff settlement story. Palladium looks ridiculously strong right now – its as if there is an underground Cold Fusion project somewhere in need of large amounts of Palladum.  Seriously, I don’t know what the deal is there.  It can’t be cars, since we’re having a mini-Carmaggedon in China, the US, and Europe.  But up palladium goes.

The buck went nowhere again today, closing up +0.02 [+0.02%] to 95.50. While it did make a new high, the northern doji candle was neutral, and forecaster was unchanged. Buck remains in an uptrend in both the daily and weekly timeframes, but those uptrends look fairly weak.

GBP staged a strong rally today, up +0.82%. A rally in GBP is a wager against any sort of BRExit really happening – at least from what I can tell anyway.

Crude fell -0.15 [-0.28%] to 52.64. Crude actually sold off about a buck, but buyers bid the price back to mostly even by end of day. The high wave candle was mildly bullish, but forecaster dropped a bit – remaining in an uptrend. Crude is now above its 50 MA, for the first time in 3 months. This is a positive sign. Crude remains in an uptrend in all 3 timeframes.

SPX rose +19.86 [+0.76%] to 2635.96. Much of the move came on the rumor about the US relaxing the tariff regime. It speaks to a likely bullish response once the trade settlement occurs. Of course – a significant move is probably also already built into price – if the talks fall through, SPX could crash fairly abruptly. SPX managed to close today above its 50 MA, a positive sign. SPX remains in an uptrend on the daily and weekly timeframes – and the monthly may issue a buy signal if we rally a bit more.

Materials led (XLB:+1.76%) along with Industrials (XLI:+1.71%), while communications (XLC:+0.41%) and utilities (XLU:+0.42%) trailed. This sector map looks a lot like a tariff settlement-driven move.

VIX rose +0.98 to 18.06.

TLT rose +0.02%, a decent move given the rally in equities. TLT is trying to put in a low – forecaster recovered fairly strong, but it remains in a downtrend. TY looked much weaker, dropping -0.20%, making a new low, following through on yesterday’s sell signal. TY remains in a downtrend in the daily and weekly timeframes. The 10-year was not pleased by the rally in equities, it would seem. The 10-year yield rose +0.8 to +2.76%.

JNK rose +0.26%, a new high, which pulled forecaster into a somewhat stronger uptrend. JNK confirms that rally in equities, although most of JNK’s move happened well before the rumors of the tariff reduction.

CRB rose +0.06%, with 2 of 5 sectors rising, led by agriculture (+0.97%). Commodities are just below the 50 MA. A cross of the 50 would be a positive sign.

The market continues to lean in the risk-on direction.  That’s seen by the moves in both SPX and JNK, as well as the continued bid under crude.  Likewise, the gradual change back to a rate-rise prediction also suggests a risk-on bias is returning.  Perhaps it is China’s apparent willingness to throw money at their economy that is helping prices to move higher too.

There is a reduced need for safe havens when the mood is returning to risk.  At least for now anyways.

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