PM Daily Market Commentary – 9/19/2017
Gold rose +3.60 [+0.27%] to 1314.60 on moderately heavy volume, and silver climbed +0.11 [+0.61%] to 17.36 on moderately light volume. The buck dropped -0.28%; currency accounts for gold’s move today.
Gold’s trading range today was very narrow; no candle read for today. Gold forecaster ticked up +0.05 to -0.46; that’s still a downtrend. It looks like traders are just waiting for the announcement from the Fed tomorrow.
COMEX GC open interest rose 348 contracts.
Rate rise chances (Dec 2017) remains at 56%.
Silver rallied more strongly than gold, but it too failed to form an interesting candle pattern. Forecaster moved up +0.10 to -0.60, which is still a fairly steep downtrend. Not much change from yesterday.
Open interest in COMEX SI contracts fell by -258 contracts.
The gold/silver ratio fell -0.25 to 75.73. That’s bullish.
Miners moved up along with gold, with GDX up +0.67% on very light volume, and GDXJ up +0.67% on moderate volume. More narrow trading ranges here too; GDX printed a bullish harami, which the code felt was a bearish continuation (i.e. it was a not-very-bullish harami). Forecasters: GDX: +0.10 to -0.42, GDXJ: +0.11 to -0.44. Downtrend remains in place, but they are slowing.
Today, the GDXJ:GDX ratio rose slightly, and so did the GDX:$GOLD ratio. That’s slightly bullish.
Platinum fell -0.95%, palladium was hammered, dropping -2.84%, while copper rallied +0.25%. Platinum is in a steep downtrend, palladium’s downtrend is getting a bit steeper, while copper may be putting in a low.
USD fell -0.26 to 91.56, moving down towards the previous low of 91.16. Today’s move took USD below the 9 MA, which is bearish. The short black candle was a (bearish) continuation. Forecaster fell -0.24 to -0.28, moving into a downtrend. Was this about Trump’s “Destroy Korea” speech at the UN, or something about what traders expect out of tomorrow’s Fed announcement? A drop through 91.16 would be fairly unpleasant for the buck – and should be gold positive. Right now, that’s looking more likely than not.
Crude fell -0.06 to 50.25; crude rallied, then fell, popping back up after market close on a bullish-looking API report: a crude build (1.4 mb), gasoline draw (-5.1 mb), distillates draw (-6.1 mb). The candle print was a bearish engulfing – which looks more like a doji to me. Code thinks its a bullish continuation. Forecaster fell -0.34 to +0.28; still an uptrend, but a fading one. The EIA report tomorrow should either give us a reversal, or a breakout.
SPX rose +2.78 to 2506.65, which is yet another new all time high for SPX. Print was a bearish doji star, which the code felt was a bullish continuation. More rotation today; from sickcare (XLV:-0.79%) and utilities (XLU:-0.20%) to financials (XLF:+0.76%) and materials (XLB:+0.51%).
VIX rose +0.03 to 10.18.
TLT moved lower again today dropping -0.25%, making a new low, ending the day just below its 50 MA. Bonds don’t look very happy right now, having fallen for 7 of the last 8 days.
JNK rose +0.16%; JNK has been moving steadily higher over the past 7 trading days. Risk on? Search for yield? Who knows. As long as the world doesn’t blow up, 5.8% appears to be a pretty good return. [That’s not a recommendation].
CRB fell -0.63; that’s a swing high for CRB. 3 of 5 sectors fell, led by agriculture (-1.00%).
It was a pretty quiet day today – it appeared to me that traders were on hold waiting to see what the Fed had to say tomorrow. The FOMC announcement is at 2pm, with a press conference at 2:30pm where Chair Yellen will tell us all about the balance sheet normalization program, and (probably) encourage us to pretend it is just no big deal. I’m guessing the market’s focus will be on the expected pace of the reduction. Additional focus will be on expectations for inflation, because of that recent CPI report that showed annualized inflation was running at 4.8%, and even “core” inflation was 2.4%.
The buck is nearing a breakdown once more. Hurricanes, Donald Trump, or FOMC, take your pick for a driver. A drop to new lows should help gold. As I said before, right now that’s looking more likely than not.
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FOMC meeting & press conference just concluded.
Executive summary: no rate increase this meeting; balance sheet reductions start next month, at $10 billion per month, rising every quarter until it reaches a total of $50 billion per month. It will be on a preset path, presumably so as to not keep shocking the markets meeting after meeting.
Fed expects one more rate increase in 2017, and they forecast 3 more increases for 2018.
Market appeared to be surprised by their (relative) hawkishness. Euro sold off hard following the announcement, dropping more than a full point. Gold and silver sold off right along with the Euro.
Gold closed $1303 (down about $17), silver $17.17 (down about $0.23). A bit more than a currency move, but not too much more.
The important question for gold: will there be follow-through for the buck once the markets open in Asia and Europe?