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PM Daily Market Commentary – 2/22/2017

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  • Thu, Feb 23, 2017 - 03:08am

    #1

    davefairtex

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    PM Daily Market Commentary – 2/22/2017

 

Gold rose +1.50 to 1238.20 on moderately light volume, and silver climbed +0.04 to 18.07 on heavy volume.  The major event today was the release of the minutes from the most recent FOMC meeting, which occurred at 14:00 Eastern. The minutes revealed that “many” participants felt another rate hike would be appropriate “fairly soon” – with hawks arguing that a rate hike sooner rather than later would afford the Fed more flexibility later down the road.

The release caused an immediate spike higher in gold and bonds, while the dollar sold off. The spike higher in gold brought gold back into the green.

While the trading range today was fairly narrow, gold did feel as though it was a bit under pressure today. The candle print was a “high wave”, which the candle code assessed as bearish. Gold remains above its 9 EMA.

Open interest at COMEX for GC rose by +3,951 contracts.

Rate rise chances (May 2017) rose to 44%.

Silver did not have to endure as much selling pressure as gold, but in turn it bounced less strongly following the FOMC minutes at 14:00. Silver ended up printing a spinning top, which was neither bullish nor bearish. The gold/silver ratio fell slightly, down -0.07 to 68.52. Silver remains above all 3 moving averages.

Miners fell, with GDX down -1.18% on moderate volume, while GDXJ dropped -0.15% on moderate volume also. The miners sold off steadily – even relentlessly – for the first 2.5 hours of trading; it looked like some relatively serious distribution was taking place. The miners bottomed out just before noon, and then spiked higher along with gold following the FOMC minutes release at 14:00. The bounce back in the juniors was stronger than in the senior miners. Candle print for GDX was a “takuri line”, which the candle code said was relatively bullish – a 36% chance of marking the low. Of course, yesterday was also approximately that bullish too, and today’s morning sell-fest was more than a little bit alarming. Had gold not rallied at 14:00, today’s miner chart would probably have looked quite a bit more unpleasant.

Platinum rose +0.70%, palladium dropped -1.64%, and copper fell -0.20%.

The buck made a new high today, rising to a high of 101.66, but then plunged following the FOMC minutes release at 14:00 Eastern, closing down -0.15 to 101.14. Candle print was a shooting star, which the candle code saw as somewhat bearish, providing a 29% chance of marking the high. The 50 MA is proving to be some strong resistance for the buck.

Crude fell -0.36 to 53.87. Crude was down fairly significantly for most of the day, but after market close, the API report showed a surprise bullish crude oil inventory draw of 0.8 million barrels. This caused an immediate 40 cent spike in the price of crude, wiping out about half of the day’s loss. Energy equities (XLE) had a simply horrid day, down -1.50% printing one of those disagreeable black marubozu candles; energy equities have been in a downtrend for about 11 weeks.  If the EIA report confirms the draw tomorrow, we might just see a real reversal in energy equity prices.  A guy can hope anyway.

SPX fell -2.56 to 2362.82, falling for only the 2nd time in 10 days. The narrow trading range resulted in an NR7 candle print, which was only slightly bearish, with a 14% chance of marking the top. Utilities led (XLU:+0.42%) while energy was by far the worst (XLE:-1.50%). VIX rose +0.11 to 11.74.

TLT rose +0.17%, remaining within its recent trading range and closing just above its 9 EMA. Currently, 20 year bonds yield 2.78%. Surprisingly, the FOMC minutes release was bond-positive.

JNK moved up +0.03%, more or less no change on the day. JNK made a new high, and it continues to signal risk on.

CRB dropped -0.43%, pulled lower by falling energy prices. 4 of 5 sectors dropped. CRB continues to retreat from the highs set back in mid-January.

While gold looked good yesterday, today wasn’t quite so positive, especially in the mining shares that experienced a relentless morning sell-off which lasted over two hours. Even the afternoon drop in the buck wasn’t enough to spark a real rally. I was probably premature to buy without seeing an actual swing low. That’s what “high risk” means; buying in advance of confirmation means you get a potentially better price – but only if you turn out to be right about the reversal.

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  • Thu, Feb 23, 2017 - 04:08pm

    #2
    vadim tabachnikov

    vadim tabachnikov

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    Miners…

Gold +1,5% 1250+, gdx +1,48% abx +1,26%… Wow, miners are so weak, both in terms of price and volumes! Any thoughts? 

  • Thu, Feb 23, 2017 - 04:12pm

    #3

    Cold Rain

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    vadim_75 wrote:Gold +1,5%

[quote=vadim_75]

Gold +1,5% 1250+, gdx +1,48% abx +1,26%… Wow, miners are so weak, both in terms of price and volumes! Any thoughts? 

[/quote]

False breakout in PMs?

  • Thu, Feb 23, 2017 - 04:39pm

    #4
    vadim tabachnikov

    vadim tabachnikov

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    Which is recognized as such

Which is recognized as such in advance? 🙂

  • Thu, Feb 23, 2017 - 05:38pm

    #5

    davefairtex

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    check out

Check out GLD:$XEU.  Its looking very strong.

At the same time, GDX:GLD is not looking all that great, neither is SIL:SLV.

Tea leaves suggest: maybe its more of a safe haven move – driven out of Europe?

It sure doesn't look like "risk on gold".

  • Thu, Feb 23, 2017 - 05:45pm

    #6

    davefairtex

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    Russia vs NATO: GDP graphic

Here's something I posted to my FB feed.  (I'm sure they were all simply delighted to read it, but…)

To me it illustrates just how silly the whole "Russians are coming!" fearmongering really is.

Of course we know from The Backfire Effect that actual data often has the reverse effect on those whose very reality/identity depends on a set of facts not being true.

Fun fact: South Korea has a larger GDP than Russia.

  • Thu, Feb 23, 2017 - 09:42pm

    #7
    vadim tabachnikov

    vadim tabachnikov

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    Oh-oh, look what’s going on

Oh-oh, look what's going on on bid/ask GDX: 30,50,100k on both sides, never seen this before!

Smells really bad for me…

 

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