PM Daily Market Commentary – 7/26/2016
Gold rose +1.30 to 1320.80 on moderate volume, while silver climbed +0.04 to 19.68 on light volume.
While at stockcharts gold shows just a slight gain, gold probably moved up about $5 today from yesterday’s close at 17:00 – the difference being the futures settlement price that happens at 13:30. You can see this in the price of GLD, which rose +0.42% today – substantially more than the formal move by the GC contract. I think stockcharts has changed the way they select futures data closing prices; I seem to remember the GC contracts using the last price at 17:00 instead of how they are doing it now.
Even with the rally, gold remains in its descending triangle pattern.
Commercials will want to move prices lower following FOMC; the only question is, will the buyers go along with the move or not.
Gold open interest increased by +10,724 today, which is slightly larger than the decrease we saw yesterday. That’s a big increase. What’s that about? I have no idea.
Silver also moved very little today, remaining within its own descending triangle and below its own 9 EMA. Volume was particularly light. It probably helped that commodities were mostly flat today also.
The miners were inspired by the modest gold rally; GDX rose +2.78% on moderate volume, while GDXJ climbed +3.68% on heavy volume. Both miner ETFs printed two-candle swing low patterns – providing about a 50-60% chance of forming a low. Volume on GDX was a little light, and the miners remain below the 9 EMA. I was surprised the miners did this well right before FOMC; if our central planners start chattering about rate rises and that dries up the buy-side interest at COMEX, we could see a fair amount of selling in the mining shares. On the other hand, a gold rally post-FOMC probably ends up with miners breaking out to new highs once again.
Platinum rose +0.97%, palladium rose +0.59% (palladium has risen 26 days over the past 30 sessions), and copper rose +0.38%. What’s up with palladium? It has had almost a straight-line rise over the past 6 weeks. I don’t know what the story is, but it is up 30% in 6 weeks.
The USD fell -0.15 to 97.18. Mostly this seemed to be about the Yen, which rose +1.13% after a large new fiscal stimulus plan was announced by PM Abe.
WTIC dropped -0.21 [-0.49%] to 42.92, making a new low to 42.36. The candle print wasn’t anything special, but the fifty-cent rebound off the day’s low seemed to help oil equities to rally. We need a close above today’s high of 43.39 to print a swing low in oil. The Petroleum Status report tomorrow will help provide direction for the next week in crude.
SPX rose +0.70 to 2169.18. Today’s doji candle print for SPX provides us no information about direction. It appears that SPX is in a holding pattern waiting for the outcome of the FOMC meeting – as with a fair number of other things. VIX rose +0.18 to 13.05.
TLT rose +0.16%; not much change.
JNK fell -0.28%, following through from yesterday’s two-candle swing high. With today’s move, JNK has fallen below its 9 EMA and is right at the low end of its recent trading range. JNK is starting to weaken.
CRB fell just -0.05%, more or less unchanged on the day.
Most everything looks to be in a holding pattern prior to the FOMC meeting, which is due to end tomorrow at 14:00, followed by a press conference at 14:30. Economic numbers have been fairly positive lately at least here in the US. Will the market believe any rate-rise chatter that threatens a rate increase before the election in November? My guess is no, but that won’t stop the commercials from trying to force prices lower. They appeared to be doing this to some degree today, with no success.
Anyhow, we’ll know more after the announcement at 14:00.
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As far as I can tell from reading the summary – nothing happened at the FOMC meeting. A few changes here and there with the wording, but the market's reaction was one of relative relief: no rate raise.
My guess is that gold is now free to move higher. GDX was the tell yesterday with its swing low. Miners are now moving higher after a brief initial sell-off. Both the miners and metal have crossed their 9 EMA lines. That's bullish. Silver is leading – that's bullish too.
If the buck tops out and commodities can start to recover, we'll be back in business.
But Silver is partying like there's no tomorrow.
Yellen doesn't want to be 'that guy' and tell everyone that the party is over. My guess is that she'd like to hand over the baton to someone else as things stand, then it's no longer her problem. Rate hikes remove the punch bowl, no more easy credit. Dollar strength equals global deflation, I know we get there anyway due to our resource extraction problem, just not on Yellen's watch (or so she hopes).
I wish her the best of goodbyes !