PM Daily Market Commentary – 11/16/2016
Gold fell -3.40 to 1225.00 on moderate volume, and silver dropped -0.08 to 16.98 on moderate volume also. Both gold and silver traded sideways in a relatively narrow range; the dollar continued advancing on 100.72, having risen 8 straight days.
Gold rallied early in Asia again as the dollar opened lower but as the buck rebounded, the small gold rally faded. Really not much happened. Still no swing low for gold, and the candle print was a boring spinning top; no clue where we go next. With the dollar still moving higher, there doesn’t look to be much buy-side enthusiasm for gold. But – at least its not breaking down.
Rate rise chances are unchanged at 91%.
Gold open interest at COMEX fell -9,728 contracts.
Silver looked a lot like gold, rallying in Asia and then slowly selling off for the rest of the day. Silver also printed a spinning top; the candle code says this one is slightly more bearish than the one gold printed, with a 16% chance of marking a near-term high. Again it was a pretty slow day.
The miners sold off today, with GDX dropping -0.82% on light volume, while GDXJ fell a much larger -3.55% on moderately heavy volume. Candle print for GDX was a “bearish harami”, but the code doesn’t think its very bearish at all – sub 10% chance of this being a top. While the senior miners sold off at the start of the day, buyers appeared later on and pulled prices back up to about where they opened. That’s a reasonably good sign. Light volume suggests just a day of rest after the two big rally days earlier in the week.
Platinum rose by +0.60%, palladium rose +1.82%, and copper fell by -1.18%. Copper put in a swing high today; the “opening black marubozu” looks unpleasant. This might be it for copper for a while.
USD climbed +0.17 to 100.36. As mentioned, the buck opened lower in Asia, but then bounced back, eventually hitting a new high of 100.60, coming within spitting distance of the 10-year high set back in 2015. The buck backed off into the close, but printed a “long white” candle which the code says is almost certainly not the high.
Crude fell -0.41 to 45.46, after briefly making a new high to 46.41 on news that Russia is ready to support an OPEC oil production freeze. The Russian energy minister said that he believes there is a big chance the producers can agree on something by the Nov 30th OPEC meeting. After the Russia-driven spike, oil fell steadily into the close. The EIA petroleum status report showed a big 5.3 million barrel inventory build, but the bearish report was overshadowed by the chatter out of OPEC. On the chart, crude printed a spinning top, which does not look like a high.
SPX fell -3.45 to 2176.94. Equities traded in a narrow range today, with tech leading (XLK:+0.92%) and financials (XLF:-1.44%) finally seeming to top out. Candle print today was a “bearish harami”, which code assigns a 35% chance of marking the high. Looking at RUT and DJIA, both of those appear to be seriously overbought, and may be running out of steam, and XLF appears to have printed a swing high. This may be it for the post-election Trump rally. VIX rose +0.35 to 13.72.
TLT finally printed its swing low today, moving up +0.90%. TLT supports the case that the equity rally might be about over, at least in the near term.
JNK fell -0.39%, dropping back down below its 9 EMA. JNK still needs to clear the 50 MA before it can resume any sort of uptrend, and has already printed a pair of lower highs and lower lows – marking a downtrend.
CRB fell -0.40%; 4 of the 5 commodity groups fell, with only the livestock component moving higher.
The buck still hasn’t stopped – it is steadily moving on the old high of 100.72. A break above the old high could lead to a much stronger move higher (which would probably involve a cratering Euro), but my guess is since the buck is already fairly overbought (RSI-7=85), it probably won’t make it through on this leg of the uptrend. A failure of the buck to break out would probably lead to at least a modest gold rally. The toppy-looking SPX, the swing high for XLF, the possible low in TLT all sort of say the same thing: we may be at a near-term “Peak Trump”. Now the buck just needs to cooperate, and maybe we’ll see at least some sort of rebound in PM.
That said – we remain in a downtrend, and that means the shorts are in control.
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Buck broke above 100.72…and has driven as high as 101.37, and this has sent gold dropping down through support, with a new low of 1205, as well as silver down to 16.52.
The Euro is at 105.95…the 10-year low is at 104.62, not so very far away. If that gives way, Euro probably goes to parity, and I don't like to think what happens to gold. It won't be good.
Buck just doesn't seem to be stopping.
If what happened in 2008 is anything to go by, we won't have to wait long before the dollar gets inflated and PMs skyrocket. I give it 3 months max before that kicks off.