PM Daily Market Commentary – 4/22/2014
Gold closed down -7.20 to 1283.10 on moderately heavy volume; silver was off only -0.05 also on moderately heavy volume. Gold traded sideways until 0800 EDT in NY, at which point it tipped over and starting to sink. Low for the day was 1275.80, a new cycle low, and it was hit at 1135 EDT – a 4000 contract down spike that broke support and tripped a bunch of long stops. Gold rebounded quickly from the spike down, but not very far.
Silver looked better; it didn't drop as far, mostly trading sideways. Perhaps it was helped by copper, which rose +0.01 to 3.06.
The dollar tried rallying but ran into resistance at its 50 MA, ending off -0.05 to 79.99.
GDX was down early but found a bid again as gold rose off its lows intraday. GDX ended the day up +1.19% on light volume, while GDXJ was up a more substantial +2.73% on moderately heavy volume. GDXJ appears to have marked a reversal today, closing substantially higher than yesterday's high. Both GDX and GDXJ closed near their highs of the day.
The good news: GDXJ is looking pretty good from the standpoint of a reversal signal, although volume isn't as good as I'd like it to be. Both GDXJ and GDX are up on a day when gold itself scored a new cycle low, which is bullish. This has caused the two ratios (GDXJ:GDX and especially GDX:$GOLD) to give off a reversal signal of their own, which is an early bullish sign.
The bad news: GDX volume was quite light. In addition, I'd be surprised if the miners continue to rise if gold continues downhill. So the question is, will the miners lead gold into a rebound, or is this just a flash in the pan – a two or three day bounce in the middle of a steady PM downtrend?
SPX moved up +8 points to 1879 – the 6th straight up day in a row. Volume was pretty good. The higher risk stocks are starting to do better, and we are about 12 points away from yet another new all time high for SPX. Most importantly, the pattern of lower highs was broken today, which is a bullish sign.
I thought maybe some gold bugs could answer my question regarding Treasury auctions as reported by Bloomberg. The Yield Awarded is always more than the Coupon (attached interest rate). This implies the Bills/Bonds sold for less than face value. Is this because the primary dealers take a cut/fee and the interest difference is that fee?