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PM Daily Market Commentary – 9/17/2018

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  • Tue, Sep 18, 2018 - 02:07am

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    davefairtex

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    PM Daily Market Commentary – 9/17/2018

Gold rose +7.68 [+0.64%] TO 1208.29 on moderate volume, while silver climbed +0.13 [+0.96%] to 14.21 on moderately light volume. The buck plunged -0.46%, a strong move down, and that seemed to aid the metals today.

After market close, Trump announced that the tariffs on $200 billion in Chinese products will start September 24th. They would be set at 10%, to rise to 25% by January 1, 2019. This allows companies time to adjust their supply chains to alternate countries. Trump further stated that if China retaliates, the US will immediately move to phase 3 – tariffs on $267 billion of additional imports.

https://www.reuters.com/article/us-usa-trade-china-tariffs/china-says-it-will-retaliate-after-trump-imposes-fresh-tariffs-idUSKCN1LX2M3

The South China Morning Post then published an article that said China was likely to cancel plans to send trade negotiators to Washington as a result of Trump’s tariff declaration.

https://www.scmp.com/economy/china-economy/article/2164642/beijing-likely-cancel-trade-war-talks-after-donald-trump-ups

Gold rallied along with the Euro, hitting its day high at around 10:30, after which it sold off into the close.   Candle print was a bullish harami (33% bullish reversal), and forecaster moved up +0.26 to -0.19, which is still a downtrend for gold. Gold did manage to close above its 9 MA, which is a positive sign. While gold daily and monthly remain in a downtrend, gold weekly will issue a buy signal by end of week assuming we close at these levels.

COMEX GC open interest rose +4,337 contracts.

Rate rise chances (September 2018) fell to 95%.

Silver more or less tracked gold, also making its high at around 10:30.  Like gold, silver printed a bullish harami, which was neutral rather than a bullish reversal. Forecaster ticked down -0.01 to -0.04; that’s a slight downtrend.  Silver remains in a downtrend in all 3 timeframes. Next step for silver is a break above the downtrend line – perhaps 14.45. Likely silver will depend on what copper does.

COMEX SI open interest fell -280 contracts.

The gold/silver ratio fell -0.24 to 84.91. That’s a little bullish for today, and the current level for the ratio suggests PM could be at or near a long term low. I’m going to keep saying this until the market reacts accordingly.


 

Miners rallied strongly today, with GDX up +1.89% on heavy volume while GDXJ climbed +2.65% on extremely heavy volume. XAU rallied +2.51%, and printed a confirmed bullish NR7 candle which looked very strong – a 70% bullish reversal. XAU forecaster rose +0.05 to +0.41, which is a reasonably strong uptrend. Today’s move was enough to trigger a buy signal in the weekly – and it also looks to be a weekly swing low, assuming we close here at end of week. XAU is now in an uptrend in both the daily and weekly timeframe. XAU has also broken above its downtrend line. All of these are positive signs.

The GDX:$GOLD ratio rose +1.24%, and the GDXJ:GDX ratio rose +0.74%. That’s bullish.

Platinum rose +0.72%, palladium moved up +0.95%, and copper climbed +1.09%. All the metals rallied today. Copper is struggling to put in a low. It will be interesting to see how copper reacts longer term to the date for the new tariff regime.

The buck fell -0.42 [-0.44%] to 94.48. Candle print was a bearish engulfing (39% reversal), which dragged forecaster down -0.42 to -0.34, a sell signal for the buck. Buck is now in a downtrend in daily & weekly timeframes. The buck has been more or less chopping sideways over the past few weeks, but it does look as though the momentum for the buck is heading lower.

Crude fell -0.23 [-0.33%] to 68.48. Crude tried staging a rally today which failed; this is the second day with a relatively large upper shadow. Crude remains in a downtrend on the daily, and in an uptrend in the weekly and monthly timeframes. The API report comes out tomorrow after market close.

SPX fell -16.18 [-0.56%] to 2888.80. The drop took SPX to rest on its 9 MA. SPX printed a swing high (49% bearish reversal), and the weekly forecaster issued a sell signal – assuming prices close here by end of week. SPX remains in an uptrend on both the daily and monthly timeframes. SPX may be in the process of printing a lower high; it needs a close below 2864 to confirm. If it does so, that would be a sign of a longer term trend change. Tech led down (XLK:-1.25%) along with cyclicals (-1.24%), while staples did best (XLP:+0.37%). Thats a bearish sector map.

VIX rose +1.61 to 13.68.

TLT was unchanged, rallying back from a deficit today as SPX sold off. TY looked a bit better, rising +0.04%, printing a hammer candle (41% bullish reversal), but it was not enough to pull daily forecaster back into an uptrend. TY remains in a downtrend in all 3 timeframes. The 10-year yield rose +0.7 bp to 3.0%. If SPX starts to sell off more enthusiastically, I’d guess that bonds will reverse higher, and 3% will once again mark the high point for the 10-year yield.

JNK fell -0.11%, printing a neutral-looking bearish harami, but supporting the risk-off feeling in the equity market.

CRB fell -0.44%, with 3 of 5 sectors falling, led by agriculture (-1.21%). CRB is now well below all 3 moving averages,

While gold and silver remain a bit lackluster, the miners are looking substantially better. I’m guessing there is a fair amount of dip-buying in the miners down here at gold $1200.

Interestingly, in Asia copper sold off hard after Trump’s announcement after market close, but then reversed, then inexplicably continued moving higher, and is up +1.43% as of this moment.  I don’t know why tariff announcements are good news, but there you go.

Now that the “tariff shoe” has dropped, we will see what it does to the metals prices.  So far, at least, it doesn’t look all that bad.

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