PM Daily Market Commentary – 8/3/2015
Gold fell -9.40 to 1085.60 on moderate volume, and silver lost -0.30 to 14.46 on moderate volume too. Gold was sold for most of the day, and silver was moving lower gently until oil prices collapsed, and then silver followed oil sharply lower.
News reports suggest this is about China factory orders. I don't know. Sometimes bear markets just drop on any news at all, in much the same way that bull markets ignore bad news and keep plugging higher.
The falling commodity complex is sucking both gold and especially silver down into the vortex with it. Gold remains above 1080 support, but if commodities (and oil especially) keeps dropping, it will most probably retest the 1072 lows.
Silver was fading slowly, up until oil decided it wanted to fall off a cliff, whereupon silver followed it right over the edge. Silver is quite close to testing its 14.33 low – just 13 cents away. If oil keeps collapsing, there's no way silver will hang on. The December 2014 low is 14.15, which is not far below that. Past that, we have to go back to 2009 to find previous lows. Silver is at a precarious spot.
If its any consolation, platinum was down -2.28%, and palladium was down -2.45% and made a new low. Gold was the best-behaved of all the PM group today.
Miners had a bad day, with GDX off -3.49% on heavy volume, while GDXJ dropped -3.10% on moderately heavy volume. Both miner ETFs avoided making new lows, but the senior miners are quite close to the low set two weeks ago. Unless the buck stops rallying and oil stops collapsing, that old low probably won't hold.
The dollar rose +0.18 to 97.62, a modest move but in the wrong direction. Dollar seems to be able to shake off bad news right now which adds to the troubles for PM.
SPX was pulled lower by the plummeting energy sector, but managed to rebound somewhat to close down only -5.80 to 2098.04, just below its 50 MA. SPX seems to have a teflon quality to it; even the collapsing energy sector wasn't enough to pull the equity market down very substantially. VIX rose +0.44 to 12.56.
Bond ETF TLT rallied sharply higher, climbing +1.05% and breaking above the previous "lower high" set back in May, crossing above the 200 MA at the same time. Bonds look much stronger now, having rallied 12 of the last 15 days. Money is steadily flowing into the long bond right now.
The CRB (commodity index) was pummeled, losing -1.61% and plunging below the 2009 crash lows. Commodities continue to look bad.
WTIC (oil) dropped -1.47 [-3.14%] to 45.30, making a new low. WTIC seems predestined to retest the 42.41 low set back in March. Brent did even worse, dropping -2.18 [-4.21%] and also making a new low. Oil looks terrible, having erased that swing low it made last week with today's price action.
Once again, all we can do is watch and wait. The collapse in oil is not our friend. Prospects of a swing low in gold seem distant – its still on the table, but the chances of it actually happening are fading fast.
I wish I had better news.
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