Investing in precious metals 101

PM Daily Market Commentary – 4/3/2019

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  • Thu, Apr 04, 2019 - 05:02am

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    davefairtex

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    PM Daily Market Commentary – 4/3/2019

Gold moved down -2.32 [-0.18%] to 1294.98 on moderate volume, while silver rose +0.01 [+0.03%] to 15.11 on moderately heavy volume. The buck fell [-0.28%], SPX moved up [+0.21%], crude was basically unchanged [-0.14%], unchanged, while bonds fell [TLT -0.87%, 10Y yield +3.6 bp].

Gold moved lower in a narrow range. Really not much happened today.  The short black candle was mildly bearish, and forecaster inched lower, issuing a very tentative sell signal for gold. Gold is in a downtrend in all 3 timeframes, although the short term direction looks very unclear.

COMEX GC open interest rose 986 contracts today.

Futures are showing a 5% chance of a rate cut in May, a 62% chance of one rate-cut by December and a 20% chance of 2 rate cuts. This is a slight increase in rate-cut chances over yesterday.

Silver tried to rally, then sold off, then bounced back to just above even. Today’s slight rally was enough for a swing low (59% reversal), and forecaster edged down but remains in a slight uptrend. Silver is now just barely back above the 200 MA, and remains in an uptrend in both the daily and monthly timeframes. Is this confirmation from yesterday’s dragonfly doji? The candle code says yes; the rating it gave to the swing low was quite high. So maybe this is the low for silver, at least for a time anyway.

COMEX SI open interest rose +1,987 contracts.

The gold/silver ratio fell -0.21 to 85.48. That’s mildly bullish.

Miners tried to rally but generally failed; GDX fell -0.14% on very light volume, while GDXJ rose +0.39% on moderately light volume. XAU rose +0.19%, the short black candle was a bearish continuation, while forecaster moved a bit higher but remains in a strong downtrend. XAU remains in a downtrend in both daily and weekly timeframes.

The GDX:gold ratio moved up +0.04%, while the GDXJ:GDX ratio climbed +0.52%. That’s bullish.

Platinum rose +2.14%, palladium fell -1.69%, while copper climbed +1.19%. Copper is back in a short-term uptrend, and platinum made a new multi-month closing high. Platinum could be setting up for a breakout – it is in an uptrend in all 3 timeframes. Hmm, that’s the first time I noticed this about platinum. If platinum starts to rally more enthusiastically, that should help gold.

The buck fell -0.27 [-0.28%] to 96.54. There were a bunch of candle patterns, all bearish: call it a swing high (50% reversal), and forecaster plunged but not quite enough for a sell signal. The buck remains in an uptrend in all 3 timeframes, but the daily may be setting up for a reversal.

Strong currency moves included: AUD [+0.62%].

Unelected EC President Juncker informed the UK today that there will be no short extension for the UK. As I understand it, the options are: May’s Unconditional Surrender by April 12th, hard BRExit April 12th, a long extension through 2020, or a cancellation of Article 50.

https://www.theguardian.com/politics/2019/apr/03/eu-leaders-urged-to-refuse-may-appeal-for-further-brexit-delay

Currency markets were cautiously positive: GBP +0.22%, EUR +0.30%.

FWIW, the odds on the gambling websites have the odds on hard BRExit at 22% (payoff is 9:2), and a second referendum at 53% (payoff is 15:8).

Crude moved down -0.09 [-0.14%] to 62.56. Crude made a new high today but fell back; the high wave candle was a bullish continuation, but forecaster fell, leaving crude still in a strong uptrend. The market seemingly shook off a fairly bearish EIA report (crude: +7.2m, gasoline: -1.8m, distillates: -2.0m). Crude is in an uptrend in all 3 timeframes.

SPX rose +6.16 [+0.21%] to 2873.40. Today was a new high for SPX. The high wave candle was mildly bearish (33% reversal), but forecaster was almost unchanged, remaining in a strong uptrend. SPX remains in an uptrend in all 3 timeframes.

Sector map showed materials (XLB:+1.31%) doing best along with tech (XLK:+0.81%), while energy (XLE:-0.96%) and staples (-0.49%) brought up the rear. This was a relatively bullish sector map.

VIX rose +0.38 to 13.74.

TLT fell -0.87%, making a new low; yesterday’s minor bounce turned out to be a dead cat sort of move. Forecaster moved higher but remains in a strong downtrend. TY fell too, losing -0.29%. TY also made a new low, forecaster moved lower, remaining in a very strong downtrend. But even with today’s drop, TY remains in an uptrend in the weekly and monthly timeframes. The 10-year treasury yield rose +3.6 bp to 2.52%.

JNK moved up +0.03%, another day of sideways movement. It was enough for a mild sell signal on the forecaster. HYB continues to decline, however; it is slowly moving lower. Which do we believe?

CRB climbed +0.26%, which was another new high; 4 of 5 sectors rose, led by industrial metals (+1.04%).

Not much happened in PM today; there were hints of a rebound in silver, but that’s about it.  Bonds made new lows, and SPX eeked out a new high.  Platinum was the only interesting mover; it may be forming a long term low here.

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