PM Daily Market Commentary – 4/1/2014
Gold closed down -4.50 to 1280.00 on light volume; silver was down -0.01 to 19.74 also on light volume. Once again gold traded downhill today, forming a series of intraday lower highs and lower lows that are characteristic of a downtrend. Really nothing new to report. Gold has this pattern of rallying modestly in asia, and then being sold off in London and NY, and today was no exception.
Silver, on the other hand, traded sideways within a range today – like it has done for the past four days or so. I think: buy silver, but put a stop down around 19.50 or so. Its an implicit bet on China not to implode in the next few weeks. If copper can continue holding it together, silver should snap back at least for a while. There's a chance it could even lead gold higher once gold decides to bounce at long last.
The dollar was flat today, closing unchanged. It still hasn't decided where it wants to go, and is quite close to its 50 day MA which seems to be acting as some strong resistance. Gold's $100 correction started two weeks ago when the buck started rallying. I'm not saying correlation is causation, but I do think the two are related. If the buck decides to move lower, gold may well reverse.
GDX was up +0.36% on light volume, while GDXJ was down -1.13% on moderate volume. GDX is still within a consolidation range and still looks ok, while GDXJ looks like it is about to break down and make a new low. Most likely if it does that, it will drag GDX along with it.
An alternate scenario is where gold is pounded down $20 prior to the NY open, causing GDXJ (and GDX) to sell off within the first hour and break down through support, making new lows on high volume, only to have gold reverse, resulting in a reversal of GDXJ. This is my dream scenario, since it would likely mark the low. Its scary when it happens, but its better long term since you know the bottom is most likely in and you can buy the low with a degree of confidence.
As always though, we have to wait for the market to reveal itself. Maybe the COMEX buyers will show up tomorrow.