PM Daily Market Commentary – 5/30/2019
Gold rallied +8.88 [+0.69%] to 1293.57 on heavy volume, and silver rallied +0.11 [+0.76%] to 14.51 on moderately heavy volume. Crude was smashed [-4.48%], SPX managed to rally [+0.21%], and bonds moved higher too [10-year yield -3.0 bp].
Gold moved lower for the first part of the day, but around 8 am the rally started; gold jumped about $12 in 3 hours, ending the day near the highs. The long white candle was a bullish continuation, and forecaster moved into an uptrend. Today’s move was enough to flip the weekly into an uptrend as well. This puts gold into an uptrend in all 3 timeframes.
COMEX GC open interest fell -9,785 contracts. Short-covering, or first notice day activity? Its hard to know.
Futures are showing a 13% chance of a rate cut in June, a 32% chance of one rate-cut by December and a 57% chance of 2 or more rate cuts. That’s a huge increase in the 2-rate-cut probability assessment.
Silver’s rally also started around 8 am, topping out around 3 hours later. The long white candle was neutral, and forecaster moved higher, but it remained in a downtrend. Silver did manage to close above the 9 MA, which is a positive sign, but silver remains in a downtrend in all 3 timeframes. No reversal for silver today.
COMEX SI open interest fell -689 contracts.
The gold/silver ratio was unchanged at 88.97.
The miners rallied all day long, closing near the highs. GDX climbed +1.71% on moderately light volume, while GDXJ rose +1.93% on heavy volume. XAU moved up +1.58%, the confirmed bullish NR7 looked very strong (48% bullish), and forecaster moved higher into an uptrend. It was also a swing low. The move was enough to pull the weekly into an uptrend also, and XAU ended the day convincingly above its 9 MA, for the first time in nearly two months. XAU is now in an uptrend in all 3 timeframes. This is a fairly convincing reversal for the mining shares.
The GDX:gold ratio rose +1.02%, and the GDXJ:GDX ratio climbed +0.21%. That’s bullish.
Platinum rose +0.30%, palladium jumped +1.99%, while copper fell -0.62%. That’s yet another new low for copper, palladium appears to have broken out of its recent trading range, while platinum – no reversal for platinum just yet. It remains in a downtrend.
The buck inched up +0.01 [+0.01%] to 97.59. The buck tried to rally today but failed. The doji candle was a bullish continuation, and forecaster moved higher into an uptrend. According to the forecaster, the buck remains in a downtrend in both the weekly and monthly timeframes – but it sure looks as though it is getting ready to break out higher to me.
Crude was smashed today, plunging -2.65 [-4.48%] to 56.54. Almost all of the damage happened immediately following the EIA report (crude: -0.3m, gasoline: +2.2m, distillates: -1.6m). The EIA report was significantly less bullish than Wednesday’s API report. Crude’s closing black marubozu was a bearish continuation, and forecaster dropped hard, falling into a strong downtrend. This totally wipes out yesterday’s reversal. Crude is back in a downtrend in all 3 timeframes.
SPX rose +5.84 [+0.21%] to 2788.86. All of today’s minor gains came in the futures markets overnight. The long legged doji was a bearish continuation, and forecaster moved higher but remains in a strong downtrend. SPX remains in a downtrend in both daily and weekly timeframes. SPX appears to have support right at the 200 MA.
Sector map today was led higher by consumer discretionary (XLY:+0.65%) along with tech (XLK:+0.62%), while energy did worst (XLE:-1.27%) along with financials (XLF:-0.34%). This was a neutral sector map.
VIX fell -0.60 to 17.30.
TLT jumped +0.86%, making a new multi-year high. The closing white marubozu is a bullish continuation, but forecaster fell, remaining in an uptrend, but not by much. TY climbed +0.29%, also printing a closing white marubozu – bullish continuation – and forecaster was unchanged, remaining in an uptrend. The 10-year yield fell -3 bp to 2.22%.
JNK climbed +0.19%, printing a neutral-looking northern doji, and forecaster moved higher but remains in a downtrend. -0.28%, a fairly strong move lower. JNK remains in a downtrend. , which appears to be a new low, but JNK does not look as though it is in any sort of hurry to move lower. JNK remains in a downtrend. BAA.AAA differential was unchanged yesterday. It is now in a moderate uptrend, which suggests that the credit markets are becoming slightly concerned – but no more than that.
CRB fell -0.87%. 3 of 5 sectors fell, led by energy (-3.39%). Both industrial metals and energy are now looking quite weak. Agriculture had another strong day (+3.08%). Corn is up 25% over the past 3 weeks, and wheat is up 20%.
The remarkably strong move lower in crude comes at a time when managed money is reducing its long exposure to crude. In other words, the longs are being rinsed in the same way that tends to happen in gold & silver. From looking at the COT report, this process is perhaps half over, which suggests – absent any geopolitical events – oil could end up at around $50 within the next few weeks. Of course, a strong EIA report could overpower the current trend, but without such a report, it seems as though crude prices are going to move lower.
I’m also seeing a big divergence in the extremely strong rallies in the 10-year treasury, and the relatively leisurely move lower in junky debt. Normally, the near-panic into safe haven debt would be accompanied by a near-panic out of crappy debt, but that’s just not happening. Likewise, the drop in equities is also happening in a fairly leisurely manner. Perhaps it can be explained by capital flows – from the rest of the world, into the US. Thats a safe haven move within a safe haven move.
The miners appear to have put in a reversal today; the daily-chart pattern is pretty convincing. Gold looks even stronger than the miners, while silver has yet to meaningfully recover. Perhaps the endlessly-falling copper prices are keeping silver from moving higher.
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Gold breakout above 1300 – to 1309. +1.31%.
Huge breakout in the mining shares. GDX +4.54%.
Silver? Languishing. +0.61%.
Oil – crushed again, down -3.41%.
Trigger for the breakout? Trump’s 5% tariff announcement on Mexico.