Investing in precious metals 101

PM Daily Market Commentary – 3/5/2019

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  • Wed, Mar 06, 2019 - 01:58am

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    davefairtex

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    PM Daily Market Commentary – 3/5/2019

Gold rose +1.20 [+0.09%] to 1292.77 on heavy volume, while silver climbed +0.04 [+0.30%] to 15.15 on heavy volume. The buck continued moving higher [+0.19%], SPX edged down [-0.11%], as did crude [-0.23%]. Really not much happened today.

Gold made a new low to 1286 alongside a plunge in the Euro, but it bounced back by end of day, erasing the modest $5 loss. The bullish harami/doji candle print was somewhat bullish (31% reversal), and forecaster moved higher, but remains in a fairly strong downtrend. The rally was enough to erase the sell signal on the monthly, which means gold is now in a downtrend in just the daily and weekly timeframes.

COMEX GC open interest jumped +6,023 contracts today.

Futures are showing a 1% chance of a rate cut in March, and a 7% rate-cut/4% rate-increase by December. That’s a bearish change.

Silver chopped sideways in a narrow range, first making a new low but then it rebounded, and managed to end the day in positive territory. The short white/spinning top was a bearish continuation, but forecaster jumped higher, suggesting that the downtrend has slowed substantially. Still, silver remains in a downtrend in all three timeframes.

COMEX SI open interest fell -56 contracts.

The gold/silver ratio fell -0.20 to 85.28. That’s somewhat bullish.

Miners chopped sideways for most of the day, moving higher into the close. GDX rose +0.55% on light volume, while GDXJ edged up +0.03% on very light volume. XAU climbed +0.40%, the swing low candle print looked strong (55% reversal, a fairly high rating), and forecaster jumped higher, but not enough for a buy signal. (Forecasters for both GDX and GDXJ did issue buy signals, FWIW). In spite of the rally and the swing low, XAU remains in a downtrend in all 3 timeframes. Miners appear to be bouncing off the 50 MA…although today’s move higher was not all that enthusiastic.

The GDX:$GOLD ratio rose +0.46%, while the GDXJ:GDX ratio dropped -0.51%. That’s neutral.

Platinum rose +0.05%, palladium dropped -1.13%, while copper rose +0.89%. Palladium looks as though it could be topping out – although this may just be a temporary phenomenon, given the supply situation with the metal. Platinum looks horrid; there was virtually no dip-buying after yesterday’s big smash.

The buck rose +0.18 [+0.19%] to 96.33. The buck made a new high, the long white candle was a bullish continuation, and forecaster moved even higher into its uptrend. The buck remains in an uptrend in all 3 timeframes.

There were no major currency moves today.

Crude fell -0.13 [-0.23%]. The loss, such as it was, came after the API report at 4:30 pm (crude: +7.3m, gasoline: -0.4m, distillates: -3.1m) which resulted in a $0.25 drop immediately following the release. The short black candle was neutral, but forecaster moved higher, resulting in a buy signal for crude – although not a very strong buy. Crude is now in an uptrend in all 3 timeframes.

SPX moved down -3.16 [-0.11%] to 2789.65. Mostly, SPX just chopped sideways; SPX did have a minor (6-point) sell-off in the last 10 minutes of trading, which accounted for all the losses today. The short black/spinning top was unrated, and forecaster inched lower – SPX is slowly approaching a sell signal, but does not appear in any hurry to get there. Today’s move took SPX through its 9 MA. SPX remains in an uptrend in all 3 timeframes.

Sector map shows industrials (XLI:-0.64%) and materials (-0.47%) leading down, while communications (XLC:+0.63%) and REITS (XLRE:+0.29%) doing best. Today was another bearish sector map, with both financials and tech in the red.

VIX rose +0.11 to 14.74.

TLT moved up +0.21%, which triggered a strong buy signal from the forecaster. TY was less enthusiastic, up just +0.02%; the doji candle was unrated, and while the forecaster did jump, it wasn’t enough for a buy. TY remains in a downtrend in the daily and monthly timeframes – but the monthly is very tentative and could reverse back up at any moment. The 10-year treasury yield was unchanged at +2.72%.

JNK was unchanged; it remains in a moderate downtrend, but the downtrend doesn’t look very convincing to me. At least not yet.

CRB rose +0.44%, with 4 of 5 sectors rising, led by agriculture. PM still looks quite weak.

So we got the swing low (just barely) in the miners as well as some mildly positive signs from the metals.  Given the slow-motion move lower in equities, that is perhaps understandable.  Gold did manage to move higher even though the dollar moved up – that’s a positive sign.  Right now, traders appear uncertain as to where things go next, although the sentiment is edging slightly more bearish in the Fed Funds Futures market – predictions of a December rate increase are slowly declining.

A Non-MFG ISM report came out which looked positive to me, but the equity market didn’t seem impressed.  If the market doesn’t rally on good news, that’s usually a bad sign.

Payrolls are out on Friday; perhaps we will get some guidance from them.  It will be the first payrolls report post-government-shutdown, and so it will be a clearer indication as to whether or not a recession has started/is-starting.

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