PM Daily Market Commentary – 9/29/2014
Gold closed down -4.30 to 1215.70 on light volume, while silver was down -0.19 to 17.46 also on light volume. PM rose modestly in Asia and London, but fell shortly before the NY market opened, with gold losing less than silver. Gold/silver ratio moved up +0.51 to 69.63, close to a new cycle high.
The dollar closed down -0.01 today at 85.74; it hit a new high of 85.93 intraday, but failed to hold its gains. I don't want to suggest yet another dollar top based on this slim evidence. We just have to remain patient and wait for the inevitable to occur.
Something interesting is happening to the AUD; it has had a straight-line move down over the past month and is down 7% over that time. Support from a previous low is around 86.50. Traders must be either unwinding carry trades, and/or Australia may be viewed as in trouble because of China-related issues. Of the currencies I watch, only the Brazilian Real is down more.
Miners dropped today, with GDX down -1.03% on moderate volume, while was off -0.40% on light volume. GDX closed down clearly below support, forming a new cycle low. The senior miners look ill now, with the ratio GDX:$GOLD continuing to plummet. Interest in mining shares was strong right up until early September, which is when it started to sink. Interestingly, that's about the same time that the AUD started dropping. I'm now wondering if there is a correlation there.
SPX (e-mini) futures sold off hard prior to the NY open today, but then rallied once the opening bell rang, recovering 15 points of loss but still closing down -5 to 1977. Momentum still seems to be down for equities. VIX was up +1.13 to 15.98, a relatively high value for 2014.
Long term treasuries (TLT) did quite well, rallying up +0.80% prior to the US market open, and held their gains through end of day. JNK continued dropping, and is quite near the panic lows reached back at end of July.
After chopping sideways for a week, commodities rose +0.77% today in what could be a hopeful sign for PM. WTIC rallied +0.96 to 94.32, up 4 days out of 5; it hasn't yet broken the pattern of lower highs just yet, but it has definitely slowed its rate of descent. A close above 95 would most likely signal that the oil downtrend has ended, at least for WTIC. Brent closed up +0.20 today, having chopped sideways for the past six days just above its low. It still looks bearish.
The modest recovery in the commodity space without the buck correcting is a hopeful sign for PM, but this hope has yet to actually affect PM prices, which still continue to drop.
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– China could purchase the total United States gold reserve (8133 metric tonnes) with 8% of its foreign exchange reserves.