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PM Daily Market Commentary – 4/2/2018

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  • Tue, Apr 03, 2018 - 03:59am



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    PM Daily Market Commentary – 4/2/2018

Gold jumped +15.80 [+1.19%] to 1345.40 on moderately heavy volume, and silver rallied +0.25 [+1.53%] on moderately heavy volume also. The buck hardly moved [-0.14%] – today’s PM rally wasn’t currency-related.

Gold started rallying at the open in Asia, and didn’t stop until 2 pm in New York; at least half of gold’s move occurred prior to the big sell-off in equities, and it was not apparently driven by moves in currency.  This suggests to me that traders came in to work on Monday determined to increase their exposure to gold.  Candle print for gold was a confirmed bullish doji (44% reversal), which the forecaster liked too (+0.40 to +0.40). Looks like gold is back in an uptrend. Volume looked to be a bit lighter than I would have hoped, if we are looking to see a breakout above the previous high.

COMEX GC open interest rose +3,281 contracts.

Rate rise chances (June 2018) moved up to 83%.

Silver mostly tracked gold, starting its rally at the open and topping out at about 1:30 pm.  Technically, silver’s print looked better than gold’s: a confirmed bullish spinning top/NR7 which had a 60% chance of being a bullish reversal. Silver’s forecaster screamed up +0.97 to +0.28, which is a buy signal for silver.  Still, silver remains within its 2-month trading range.  Silver really needs a close above 17 to break out.

COMEX SI open interest fell by -722 contracts today.  Managed money is record short right now.  I suspect some of today’s move in silver was short-covering.

The gold/silver ratio fell -0.27 to 81.10. That’s bullish.

Miners moved higher, with GDX up +1.14% on moderate volume, and GDXJ +1.03% on moderately heavy volume. Both ETFs printed bullish continuation patterns, and XAU forecaster dropped -0.01 to +0.35, which is still an uptrend for the miners – who issued buy signals last Thursday. Still, the moves in the miners were not all that great; the rally was relatively weak, and I’m guessing they were dragged lower by the plunge in equity prices.

Today, the GDXJ:GDX ratio fell slightly, as did the GDX:$GOLD ratio. That’s slightly bearish.

Platinum rose +0.21%, palladium plunged -1.83%, while copper rose +0.69%. Palladium made a new low and appears to be in a relatively unpleasant-looking downtrend, while copper continues to recover, with platinum somewhere in the middle. Certainly copper’s rally doesn’t line up very well with the sell-off in SPX.

The buck moved down -0.12 [-0.14%] to 89.69. Candle print today was a doji/bullish continuation. Forecaster moved up +0.06 to +0.38. Buck remains in an uptrend. Certainly the move down in the buck was relatively mild considering just how much selling occurred in equities. A clue: DJIA fell the least of the three (DJIA: -1.9%, SPX:-2.23%, RUT:-2.41%).  This suggests the selling pressure was domestic rather than international.

Crude was hit hard today, down -2.07 [-3.19%] to 62.84. Crude appeared to be pulled lower by the plunge in equity prices; candle print was a bearish continuation, and forecaster dropped -0.56 to -0.52, a sell signal for crude.  The chart for crude is hinting at a double top.

SPX fell -58.99 [-2.23%] to 2581.88. Selling started right at the open, only bottoming out towards the end of the day. SPX closed below its 200 MA for the first time in more than a year, which is a bearish sign. The opening black marubozu was a bearish continuation, and forecaster fell -0.18 to -0.55. That’s just a medium-grade downtrend for SPX. Sector map shows the cyclicals led lower (XLY:-2.82%) while utilities fell least (XLU:-0.77%). With tech and financials in the middle of the pack, the map was not as bearish as it could have been.

VIX rose +3.65 to 23.62.

TLT fell -0.02%, a terrible performance for the long bond on a big down day for equities. TY did a bit better, moving up +0.16% and making a new high. If this is the best they can do…that doesn’t bode well for what happens if/when the equity market stops moving lower.

JNK plunged -0.67%, a reasonably large-sized move, printing a confirmed bearish spinning top (60% bearish reversal); the hints of a bounce in JNK are gone, with the forecaster plunging -0.97 to -0.78. It was a new low for JNK.

CRB fell -1.02%, with 3 of 5 sectors dropping, led by energy (-2.53%). CRB is back below its 50 MA once again. Industrial metals were actually flat on the day, which is a bit surprising given the sell-off in equities.

Today traders came to work seemingly determined to buy gold. At the same time, we saw an almost-nonexistent rally in bonds during what should have been a strong safe haven mood.  This opens up the possibility that sentiment towards gold may be changing in a more serious way. If you can’t run and hide in bonds, what’s left?

That would be gold.

One day does not a trend make, but its an encouraging sign.

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