PM Daily Market Commentary – 4/30/2014
Gold was off -4.60 to 1291.10 on heavy volume; silver was down a much bigger -0.30 to 19.17 on moderately heavy volume. Gold sold off slowly but steadily all day, and silver sold off steadily, and much more rapidly. There was some volatility in gold around the time of the GDP report (0830 EDT), which came in almost flat at +0.1%. It was a terrible report ("blame the weather") and the spikes in gold around that time were the source of much of the volume on the day for gold – mostly it looked like shorts being stopped out.
Silver's drop today was possibly encouraged by copper, which sank -0.06 [-1.92%] down to 3.02, a big ugly red candle. If copper can't hang on above 3, it may well drag silver down below 19, which would not be so much fun if you're long silver. Of course all the silver miners can't make money with silver this cheap, so it will eventually rebound – but that word "eventually" doesn't necessarily mean next week or even next month. Still if you are patient, buying at these levels will likely work out in the long run.
It would be good if 19 support holds. If it closes below 19 for more than a day, we could see a lot of selling in silver…
The buck tanked during London trading; something interesting happened to the euro right around the time of the London open, and the euro took off which drove the buck lower. The dollar closed off -0.33 [-0.42%] to 79.56 making a new low, but the dollar's problems did not help gold at all.
The FOMC was a non-event, at least for gold. "More tapering", they said. The equity market rallied modestly after the release, but that was the extent of the fireworks.
The miners were off a bit, with GDX down -0.82% on light volume, and GDXJ down -1.75% on moderate volume. Basically, it was just more range-trading for the miners.
The Shanghai premium over COMEX rose again today, +2.58 to 22.43. The premiums haven't been this high since June/July 2013 – back when gold was bottoming off the 2013 gold smash. Its a very bullish situation; it will be interesting to see if the correlation (which has been strong in the past) continues to hold – i.e. that Shanghai premiums above 20 indicate a near-term bottom for gold.
The US equity market was up +6 points to 1884, only 6 points from another all time high, and volume was pretty good today. Leaders still are doing poorly, but that doesn't seem to be stopping the broad market from moving higher. Bonds also rose today, which is an odd outcome. Usually its one or the other, but not both.