PM Daily Market Commentary – 3/4/2014
Gold opened up and climbed all day long, closing up +21.70 to 1350.30 on heavy volume, making a new cycle high. Gold looked quite strong today. Silver tried to follow, but its rally attempted failed, closing up only +0.18 to 21.44 on moderate volume. As a result of silver's lame performance, the gold/silver ratio jumped +0.49 to 62.97. Silver is back to its bad behavior, significantly underperforming gold.
The USD rallied +0.31 [+0.38%] to 80.10, gaining back some of what it lost on Friday. Momentum on the buck still seems like the trend is lower, and it also seems that the buck is having really no effect at all on the price of gold.
GDX was up +1.62% on moderate volume, while GDXJ closed up +1.48% on heavy volume. Miners opened up nicely on gold's big rally, but sold off for most of the day into the close. While on the daily chart it appears that the miners did well, the picture looked like distribution from the intraday perspective.
The commodity index $CCI rallied very hard today, up +1.40%. The continuing move higher – surprising to me – definitely helps gold.
Even though gold is rallying, the bad behavior of the mining shares has me concerned. Gold is fast approaching 1360 resistance, where we can expect the shorts to pile in and the longs to take profits. Whether that results in any sort of sustained downside move is another matter.
A move through 1360 on this leg of the uptrend would be quite bullish, and would likely wash out a number of those Managed Money shorts. So which do we believe – gold, or the miners? Hard to say.