Investing in precious metals 101

PM Daily Market Commentary – 4/23/2018

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  • Mon, Apr 23, 2018 - 10:35pm



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    PM Daily Market Commentary – 4/23/2018

Gold fell -11.00 [-0.82%] to 1326.60 on moderate volume, while silver plunged -0.51 [-2.98%] on extremely heavy volume. The US Treasury department decided to delay implementation of sanctions on a major Russian aluminum producer; this caused prices in palladium and especially aluminum to plunge; a number of other metals fell in sympathy. The buck also moved very close to a breakout, up +0.69%.

Gold tracked currency today, dropped along with the Euro after Japan closed, and then slowly moved lower until the afternoon in the US. The long black candle was a bearish continuation, and gold forecaster dropped -0.25 to -0.53, moving deeper into a downtrend. Gold also dropped below its 50 MA, as well as breaking the medium-term uptrend line. All that looks bearish. The move down wasn’t all that bad given the strong rally in the buck.

COMEX GC open interest fell 3,159 contracts.

Rate rise chances (June 2018) fell to 91%.

Silver more or less tracked gold until just before 8 am in New York when silver just tipped over and sank, losing 43 of its 50 cents after that point. This was fairly closely aligned with the plunge in palladium, which happened at about the same time. The black marubozu candle was a bearish continuation, and the silver forecaster plunged -0.91 to -0.71, a massive drop. Silver ended up falling through both the 9 and the 200 MA lines. The day’s action also caused the weekly & monthly forecasters to move into downtrends.

COMEX SI open interest fell by 5,186 contracts today. That’s a big move – the shorts were probably ringing the cash register today.

The gold/silver ratio jumped +1.74 to 79.89. That’s very bearish.

Miners fell along with the metals, with GDX off -1.32% on moderate volume, while GDXJ dropped -2.03% on heavy volume. Much of the losses came on the gap-down open; while the miners weren’t able to rally, neither did they sell off all that much. XAU forecaster was quite unhappy though, losing -0.67 to -0.37, which is a sell signal for the miners. XAU also ended the day below both the 9 and 200 MA lines, which is bearish.

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

Platinum fell -0.60%, palladium cratered, losing -4.35%, while copper dropped -0.99%. All 3 metals are now in downtrends, with sell signals for palladium and copper just today.

The buck rallied sharply, up +0.62 [+0.69%] to 90.57, a new multi-month closing high.  Is this a breakout?  It is very close, certainly.  Forecaster jumped +0.50 to +0.69, which is a strong uptrend.  The buck is now in an uptrend in all 3 timeframes.

Crude rallied +0.86 [+1.26%] to 68.92. Crude sold off with most everything else around 8 am, but then the buyers appeared about 2 hours later, pushing prices up almost $2 off the lows. Forecaster liked the move, rising +0.35 to +0.20, which is a buy signal for crude. Today was a new multi-year closing high for crude. For crude to rally this strongly on a day when the rest of the complex sold off is a bullish sign.

SPX inched up +0.15 [+0.01%] to 2670.29. Not much happened today in equities; the spinning top candle was neutral. Forecaster moved up +0.08 to -0.02, which is not quite a buy signal. Energy led (XLE:+0.61%) while tech trailed (XLK:-0.36%). Equities did not seem to be much affected by the moves in the commodity complex.

VIX fell -0.54 to 16.34.

TLT rose +0.03%; as with equities, not much happened in bonds either. TY wasn’t as happy, dropping -0.14%, making a new low. TY forecaster fell -0.07 to -0.81, moving deeper into downtrend. The 10-year yield moved to a new high of 2.97%.

JNK plunged -0.31%, falling for the 4th straight day. JNK forecaster moved deeper into downtrend, falling -0.60 to -1.22. JNK is starting to look more than a little ill.

CRB fell -0.59%, with 3 of 5 sectors dropping, led by industrial metals (-3.34%) which really cratered.

While gold more or less drifted lower seemingly propelled by the rising dollar, silver’s plunge was an artifact of the severe drops in aluminum and palladium.  Silver wasn’t doing all that badly until the industrial metals were hammered by the US Treasury’s announcement.

So will prices continue to fall?  Its hard to know.  Some of it certainly depends on the buck, but it seems as though the primary mover for silver (at least) will be what happens with aluminum and palladium.  That’s my guess, anyway.  Certainly the miners weren’t all that badly hit, even though the forecaster dropped hard.

We’ll know more tomorrow.

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