PM Daily Market Commentary – 7/28/2016
Gold fell -5.50 to 1337.30 on moderate volume, while silver fell -0.21 to 20.21 on moderately heavy volume. Gold and silver both made new highs just before the US market opened, but but then sold off for the remainder of the day.
After making a new high, gold retraced a small fraction of yesterday’s gain, finding support at the 9 EMA. To me it appears that gold more or less just took a rest. The candle print for gold was a relatively innocuous long black candle, which does not appear to be any sort of reversal bar.
Gold open interest decreased by -8,269 contracts today.
Silver also appeared to take a rest; like gold, it made a new high, and the subsequent sell-off retraced less than a third of yesterday’s 70-cent gain. Silver remains well above its 9 EMA.
The miners sold off initially, but found buyers in the afternoon; GDX ended up down -0.17% on moderate volume, while GDXJ climbed +0.46% on moderately light volume. Candle print for GDX was a hanging man, which is not bearish. Even a 2% intraday dip was enough to bring the buyers out. GDX remains above its 9 EMA.
Platinum fell -0.41% after making a new high, palladium dropped -0.75% after making a new high also, while copper rallied +1.10. Industrial metals were the best-performing commodity group today.
The USD fell -0.32 to 96.72, which seemed to be a follow-on from yesterday’s drop that followed the FOMC meeting. The drop was substantially more severe than this, down almost 0.80 at one point, but the buyers showed up and pushed USD higher into the close. Buck printed a bullish takuri line candle, which is a 24-30% chance of marking a low.
WTIC dropped -0.81 [-1.93%] to 41.10, making yet another new low. Oil is starting to move into oversold territory with RSI-7 at 18. Crude has dropped 8 of the last 9 days. Even so, there is no sign yet of a bottom for oil; today’s candle print was a closing black marubozu which suggests we probably continue moving lower tomorrow. Intraday price action continues to show that every rally is being sold.
SPX rose +3.48 to 2170.06. It was another narrow-range trading day; the past three weeks has been roughly contained to a 15 point trading range, with the low at 2160 and the high 2175. SPX remains above its 9 EMA. With sentiment still at excessively bullish levels, SPX remains in dangerous territory. VIX fell -0.11 to 12.72.
TLT fell back a bit, losing -0.18% but still managing to remain above its 9 EMA.
JNK fell, dropping -0.47% and falling outside its recent trading range. Is this just about falling oil, or does it signal risk off more generally?
CRB dropped -0.22%; another red day with 3 of 5 commodity groups falling.
What does all this add up to? Oil continues to pull commodity prices lower. However, a rate rise appears to be off the table for a while, so that’s gold positive. The equity market seems poised to make a move – most likely down, based on excessively bullish sentiment. If that happens, we might see more money rotate into the PM sector as well as into treasury bonds, since gold and bonds appear to be fairly well correlated over the past few months.
The BOJ announced while I was writing this; they decided to increase their ETF buying, but nothing more. Yen rallied strongly on the “no helicopter money” news, which of course yanked the dollar lower, which was mildly positive for gold.
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