PM Daily Market Commentary – 10/20/2015
Gold rose +5.20 to 1175.80 on moderate volume; silver climbed +0.07 to 15.90 on moderate volume too. Both gold and silver rallied modestly, finding support on their respective 9 EMAs in spite of the tug lower from the current cycle.
Gold did well today, from my perspective. I expected the buck to continue moving higher, which should have pulled gold lower, but that didn't happen. Instead gold found support on its 9 EMA and staged a modest rally; even after the buck recovered towards end of day, gold held most of its gains into the close. Gold is looking quite well bid right now. If the dollar does not continue to rise, one possible outcome is what happened in mid-September – just a two day tick down followed by a breakout. If the buck does keep rising, I still think gold moves lower. Silver isn't looking quite as strong; silver's chart still shows a slowing momentum, and if we do end up moving lower, I'm guessing that silver will lead. Its higher risk right now, and given where the commercials are right now, its just high risk in general. The slowly rising gold/silver ratio underscores this too.
Miners rallied almost as hard today as they sold off yesterday; GDX found support on its 9 EMA and rose +4.01% on heavy volume, while GDXJ climbed +3.86% also on heavy volume. If not for some selling right at the close, both GDX and GDXJ would have closed higher than yesterdays high, which would have been even more bullish. The thing I liked best was that even though the buck recovered late in the day, GDX did not seem to be affected. In recent months, GDX did not like dollar rallies, but it didn't seem to matter today. Miners, like gold, have a serious bid underneath them right now. Its a strong sign when a big sell-off is matched by a similar-sized rally the very next day.
The USD spent most of the day in negative territory, rallying in the NY session to close down just -0.01 to 94.94, printing a dragonfly doji on the day. That particular candle signals strength under the market. Like with the miners, someone is out there "buying the dip" in the dollar. Buck remains above its 9 EMA. I think its more likely than not the buck will continue to rise for a while longer.
SPX tried to make a new high today and failed, falling -2.89 to 2030.77. There wasn't much excitement however; the trading range was relatively narrow. VIX rose +0.77, traders taking this as perhaps marking a top for SPX. Certainly momentum is slowing, but I need to see a close below the 9 EMA before I started to think a correction was coming. My computer thinks SPX is weakening too, but it is not calling for a correction just yet.
JNK was flat today; no change. This is the second day closing above its 50 MA. While JNK is still looking quite bearish right now, the longer it stays above the 50 the less bearish it starts to look.
Bond ETF TLT fell again today, down -0.61%. Bonds have been trading sideways in a range for the past few months now, and right now they are pretty much dead center in the range.
The CRB rose +0.35%, keeping CRB above its 50 MA for now. Although CRB is in a mild uptrend, it just feels bearish to me.
WTIC fell another -0.65 [-1.40%] to 45.92, falling slowly towards its 50 MA and 44 support. Brent just dropped below its 50 MA today; further selling in Brent will most likely drag WTIC lower. Critical 47.50 support for Brent is less than a dollar away. Its an important price level to watch; it appears to be a "line in the sand" – you can almost draw a straight line along 47.50. Whenever something like that appears on the chart, I imagine there is a deep-pocketed buyer who will do whatever it takes to keep oil above that level. Until the money – or the willpower – runs out, of course. After that, the adjustments tend to be very rapid.
HAA has 100 oz gold bars right now in NYC at 1201.27/oz [+2.19% over spot], and 1000 oz silver bars in NYC at 16.33/oz [+3.69% over spot]. Eagles in NYC are quoted at 19.45 [+23.49% over spot]. Eagle premiums continue to fall, while big bar premiums are unchanged.
Gold is hanging tough, and the miners have a real bid underneath them. If the buck falls instead of rises, I'd expect to see higher gold and miner prices in relatively short order. The path of least resistance is still down, but there is some chance we keep moving higher in the near future.
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