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PM Daily Market Commentary – 10/20/2016

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  • Fri, Oct 21, 2016 - 01:14am



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    PM Daily Market Commentary – 10/20/2016

Gold fell -3.70 to 1266.30 on moderate volume, and silver dropped -0.17 to 17.52 on moderate volume also.  The primary driver of prices today was an ECB meeting and press conference, where Chairman Dragi specifically did not mention an extension of QE, and hinted at possible tapering operations; this caused the Euro to tank, and the buck to move higher.

Today. gold made its day high immediately following the (no change) ECB announcement but then it reversed course, selling off briskly and ending up printing a spinning top candle on the day.  The drop in gold came at the same time as a strong rally in the buck (and a fall in the Euro).  Once again a dollar rally caused gold to fall.

The December rate-rise projection rose to 68%, up 4%.

Gold open interest at COMEX rose +6,479 contracts.

Silver dropped harder than gold today, falling below its 9 EMA and printing a bearish engulfing, as well as a two-candle swing high.  The rating on the swing high was relatively weak; only a 25-37% chance of marking the top.  Still, it was a disagreeable outcome, which caused the gold/silver ratio to rise by +0.33 to 72.23.  Silver is not looking great.

The miners sold off immediately following the ECB meeting, but then slowly rallied back, with GDX down just 0.24% on light volume, while GDXJ dropped -0.67% on moderate volume.  The miners did fairly well, all things considered.  The candle print for GDX was a doji (and/or a spinning top); the miners look the most bullish of all PM components today.

Platinum fell -0.87%, palladium moved down -0.42%, and copper dropped -0.40%, printing yet another new low.  It was not a great day for the metals overall.

USD broke out to new highs today, up +0.37 to 98.27.  The dollar breakout caused PM to reverse course and fall; the rally came immediately following the ECB meeting and press conference.  I’m not quite sure why the buck rallied (and/or the Euro fell): Draghi said basically three things:

  • the ECB will do more if needed
  • he reported that the ECB didn’t discuss extending QE
  • the ECB is not likely to abruptly end QE; i.e. a taper rather than termination

Crude plunged -1.08 to 50.43, printing a two-candle swing high on the day; a 28-40% chance of marking the high.   There was no single event that caused crude’s drop; it more or less sold off steadily all day long.  The plunge coming so soon after Wednesday’s bullish petroleum status report doesn’t feel all that great.  Oil remains above its 9 EMA, but not by much.

SPX fell -2.95 to 2141.34.  This modest loss dropped SPX back below its 9 EMA.  Sickcare (XLV:+0.47%) rose, while industrials (XLI:-0.54%) fell.   Most sectors were down on the day.  VIX fell -0.66 to 13.75.

TLT rose +0.11%, not managing to rise above the 9 EMA just yet.

JNK rose +0.33%, moving up to within about ten cents of the all time high.  JNK remains in a strong uptrend.

CRB fell -1.04%; CRB printed a swing high today, and dropped below its 9 EMA.  This is a relatively important danger sign for commodities.  Energy, agriculture, and industrial metals all dropped today.

Miners remain a bright spot in the PM complex, selling off but then rallying right back again.  The dollar remains the bad guy, pulling PM and industrial metal prices lower.  I feel like a bit of a broken record saying this, but if the buck continues to move higher, that will cause problems for gold and silver, with silver looking especially weak at the moment.  If silver drops below that 200 MA, it could get ugly for PM.

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