PM Daily Market Commentary – 11/18/2019
Gold rose +3.28 [+0.22%] to 1478.20 on heavy volume, while silver moved up +0.08 [+0.47%] to 17.3 on heavy volume also. The buck fell [-0.24%] along with crude [-1.80%], while SPX inched higher [+0.05%] while bonds rallied [10y -2.6 bp].
Gold sold off in Asia and London, reversing around 8 am, rallying through late morning in New York, erasing all the early losses and then some. The spinning top candle was a bullish continuation, and forecaster moved lower but remains in an uptrend. Gold remains in a downtrend in the weekly and monthly timeframes. Gold/Euros is in more or less the same position.
COMEX GC open interest jumped +7,719 contracts, or 3.5 days of global production in new paper.
Futures are projecting a 0% chance of a rate cut in December.
Silver more or less followed gold, bottoming out at 8am, then bouncing back into the green by late morning. The high wave candle was a bullish continuation, while forecaster inched lower, remaining in a slight downtrend. Silver is in a downtrend in the daily and weekly timeframes, but the trends are quite shallow.
COMEX SI open interest fell -395 contracts.
The gold/silver ratio fell -0.21 to 86.29. That’s mildly bullish.
Miners rallied all through the morning, closing near the highs of the day. GDX moved up +1.72% on moderate volume, while GDXJ climbed +1.48% on light volume. XAU rallied +1.40%, the opening white marubozu was a bullish continuation, and forecaster jumped higher into what is now a strong uptrend. XAU remains in an uptrend in both daily and monthly timeframes.
The GDX:gold ratio moved up 1.49%, and the GDXJ:GDX ratio fell -0.24%. That’s bullish.
Platinum rose +0.49%, palladium jumped +1.76%, and copper dropped -0.66%. This pattern suggests negative sentiment for the US-China trade deal.
The buck fell -0.23 [-0.24%] to 97.35. The opening black marubozu was a bearish continuation, and forecaster fell deeper into its downtrend. The buck remains in a downtrend in the daily and weekly timeframes.
Large currency moves included: GBP [+0.39%].
Crude fell -1.04 [-1.80%] to 56.89. The long black candle was a bullish continuation, but forecaster inched lower, entering a slight downtrend. Today’s move pulled crude below both the 200 and the 9 MA lines. Crude is now in an uptrend in both weekly and monthly timeframes.
SPX inched up +1.57 [+0.05%] to 3122.03. The short white candle was a bullish continuation, and forecaster inched higher and remains in an uptrend. SPX remains in an uptrend in all 3 timeframes.
REITs led (XLRE:+0.54%) along with staples (X:P:+0.52%), while energy (XLE:-1.22%) and industrials (XLI:-0.38%) did worst. This was a somewhat bearish sector map.
VIX rose +0.41 to 12.46.
TLT rose +0.18%, the short black/spinning top was a bullish continuation, and forecaster inched higher, remaining in a strong uptrend. The 30 year yield fell -1 bp to 2.30%. TY climbed +0.09%, the spinning top candle was a bullish continuation, and forecaster inched higher into its strong uptrend. The 10 year yield fell -2.6 bp to 1.81%. TY is now in an uptrend in both the daily and weekly timeframes.
JNK fell -0.09%, the short black candle was neutral, and forecaster moved higher into an uptrend. BAA.AAA differential remains at +0.87 bp. There really is no worry – at least from this indicator – over credit quality.
CRB plunged -1.01%, with 4 of 5 sectors falling, led by energy (-1.59%). Industrial metals remain the weakest sector by far, having dropped 8 of the last 10 days; today they plunged -0.88%.
Continued support for gold and bonds, and continued selling in copper and other industrial metals paint a picture of pessimism about the US-China trade deal.
And today Beijing finally confirmed what have been my suspicions for a while now, per CNBC:
The Chinese are looking carefully at the political situation in the U.S. including the impeachment hearings and the presidential election, the source said, adding the officials are wondering if it is more rational to wait things out since it is unclear what Trump’s standing will be even in a few months. https://www.cnbc.com/2019/11/18/mood-in-beijing-about-trade-deal-is-pessimistic-government-source-tells-cnbc.html
Right. They want Trump to cave on tariffs in exchange for pork & soybeans. Trump didn’t do so (and good for him on that score), and now they are a little irritated that the plan didn’t work.
And there is that Hong Kong Democracy bill that is stuck in the Senate, which which has bipartisan support; it is slightly different than the one already passed by the House – the soonest it could reach Trump’s desk would be after the Thanksgiving holiday. That’s probably the next shoe to drop, although it won’t be dropped too quickly. I do not think we’ll see a trade deal unless Trump caves – and it does not look like he will do so at this point.
This is gold-positive.
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