Investing in precious metals 101

PM Daily Market Commentary – 10/7/2019

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  • Tue, Oct 08, 2019 - 04:52am

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    davefairtex

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    PM Daily Market Commentary – 10/7/2019

Gold fell -11.38 [-0.75%] to 1502.74 on moderately heavy volume, and silver dropped -0.11 [-0.62%] to 17.53 on extremely light volume. The buck moved higher [+0.17%], while both crude [-0.36%] and SPX [-0.45%] fell. Bonds fell also [10Y yield +3.8 bp].

Gold opened higher, but then spent the day falling, with a large chunk of the move down happening during the US session at 1:35 pm. The long blck candle was a bullish continuation, but forecaster fell, moving gold back into a downtrend. Gold is now in a downtrend in both daily and weekly timeframes.

COMEX GC open interest fell -5,197 contracts. Looks like some cash-register ringing on the decline, which I take to be a good sign.

Futures are projecting a 72% chance of a rate cut in October, an 83% chance of one rate cut in December, and a 38% chance of two rate cuts. That’s a fairly sharp decrease from last Friday.

Silver chopped sideways, but ended up closing at the lows of the day. The short black/NR7 was unrated, and forecaster dropped into a downtrend. Today’s decline also pulled the weekly forecaster into a downtrend as well – leaving silver in a downtrend in both daily and weekly timeframes.

COMEX SI open interest fell -515 contracts.

The gold/silver ratio fell -0.11 to 85.72. That’s neutral.


Miners rallied for the first 90 minutes, then sold off through the remainder of the day. GDX fell -1.04% on moderately light volume, and GDXJ dropped -1.46% on light volume. XAU moved down -0.90%, the doji candle was a bullish continuation, and forecaster moved higher into its uptrend. XAU remains in an uptrend in the daily and monthly timeframes.

The GDX:gold ratio fell -0.29%, while the GDXJ:GDX ratio dropped -0.43%. That’s somewhat bearish.


Platinum fell -0.34%, palladium moved down -0.18%, while copper rallied +0.74%. This move hints at an improvement in the US-China trade sentiment.

The buck moved up -0.15 [-0.15%] to 98.44. The short white candle was a bearish continuation, and forecaster moved a bit higher but remains in a downtrend. The buck remains in a downtrend in the daily and monthly timeframes.

Large currency moves include: AUD [-0.35%], JPY [+0.45%].

Crude fell -0.19 [-0.36%] to 52.71. Crude staged a strong ($1.40) rally, topping out at around 11 am, and then proceeded to plunge for the remainder of the day. The shooting star candle was actually a bullish contination, and forecaster jumped higher, moving into an uptrend. Crude is now in a downtrend in the weekly and monthly timeframes. Is this the crude reversal we have all been waiting for? It doesn’t feel like it to me.

SPX fell -13.22 [-0.45%] to 2938.79. SPX rallied fairly strongly through the early afternoon, but then fell for the remainder of the day – kind of like crude. The shooting star candle was a bullish continuation, but forecaster moved lower, pulling crude into a downtrend. Today’s decline pulled both weekly and monthly forecasters into a downtrend too – SPX is now in a downtrend in all 3 timeframes.

Energy did worst (XLE:-0.89%) along with staples (XLP:-0.81%), while communication services did best (XLC:unch) along with REITs (XLRE:-0.18%). This was a somewhat bearish sector map.

VIX rose +0.82 to 17.86.

TLT plunged -0.83%, the swing high pattern was quite bearish (63%) and forecaster moved lower but remains in a strong uptrend. TY fell -0.20%, the swing high pattern was also bearish (51%), and forecaster headed lower but remains in an uptrend. TY remains in an uptrend in all 3 timeframes. The 10-year yield rose +3.8 bp to 1.55%.

JNK fell -0.05%, the long legged doji was a bullish continuation, and forecaster moved into a slight uptrend. The bounce in JNK doesn’t look very compelling. BAA.AAA differential jumped +5 bp to +93 bp. That came on Friday – it is a large move. Is the credit market starting to get slightly worried about junky debt?

CRB fell -0.23%, with 4 of 5 sectors falling, led by livestock (-1.28%).

Well, SPX looks as though the 2-day rally may have run its course.  Of course, if the US-China trade talks start to sound positive, SPX probably continues moving higher, but the hints are that China isn’t so prepared to make a deal right now.  Perhaps it is all the talk of impeachment (one US politician said he was concerned that Trump might get re-elected if he isn’t impeached) that is encouraging the Chinese to wait. End of this week should provide some more information.

Same is true with Brexit.  End of this week – Johnson will allegedly be forced to ask for yet another extension to the endless Brexit saga.  Or maybe he won’t.  German automakers sounded a bit upset this past weekend: perhaps the ever flexible Mrs Merkel will be motivated enough to persuade the EU to come to an arrangement at the 11th hour.

https://news.yahoo.com/german-automakers-warn-hard-brexit-162000143.html

Positive news in one, or both areas would probably be gold-negative.

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