PM Daily Market Commentary – 4/7/2015
Gold fell -6.30 to 1208.20 on moderately light volume, while silver dropped -0.14 to 16.83 on moderately light volume too. PM sold off today at least partially as a result of a massive +1.10 rally in the buck. The fact it didn't fall further was actually good news.
Gold marked a swing high today. That's a danger sign, and such events often signal a correction is coming. That doesn't mean we drop from here, but it will add some selling pressure in the US market. Gold in Euros actually rose today, up +0.48%. It is important not just to look at gold in one currency, because with an international commodity like gold, buying pressure can come from outside the US too.
The miners had more trouble with the rising dollar than gold did, with GDX selling off relatively hard, down -2.54% on moderately heavy volume, while GDXJ dropped a bit less, down -2.29% on moderate volume. MIners continue to do poorly when the dollar rises.
The dollar rallied today, rising +1.10 [+1.13%] to 98.06, a really large move. The buck is back over its 9 EMA, however it is still in what appears to be in a correction. It would take a close over 99 to move the buck back to a more bullish stance in the short term. Medium and longer term, the dollar remains in a strong uptrend.
SPX tried rallying in the morning, but the rally eventually failed, and SPX ended up selling off at the close, ending the day down -4.29 [-0.21%] to 2076.33. SPX printed an inverted hammer on the day. There was no follow through from yesterday's big rally. SPX is currently looking for direction – until we close below 2035 or above 2120, we won't have any clear sense from a technical basis as to where we go. Although my guess is that things will move lower based on the current trends in macro data, the market can always surprise. VIX rose +0.04 to 14.78.
Bond ETF TLT rose +0.84% – bonds have been chopping sideways for the past few weeks; they appear to be looking for direction. Perhaps once the equity market figures out where it wants to go, bonds will also.
The CRB (commodity index) was very strong today, up +0.83% in the teeth of that big dollar rally. The very impressive move in CRB led to the second daily close above the 50 MA. Commodities may have found a bid at long last.
WTIC continued moving higher also, up +1.26 [+2.42%] to 53.25, closing above a couple of recent highs and inching closer to the previous high of 54 and change. Its all the more impressive given the dollar's rally today. Tomorrow we have the weekly Petroleum Status Report at 1030 EDT, which often moves the market.
Over the recent past, commodities and oil are now looking more supportive of a move higher in PM. Dollar is possibly supportive, if it continues its correction. On the chart, gold is looking a bit iffy, with the swing high marked today and the gravestone doji yesterday. I think the buck will need to either hold steady or decline to keep gold moving higher, but that's just my guess.
Note: If you're reading this and are not yet a member of Peak Prosperity's Gold & Silver Group, please consider joining it now. It's where our active community of precious metals enthusiasts have focused discussions on the developments most likely to impact gold & silver. Simply go here and click the "Join Today" button.