PM Daily Market Commentary - 12/11/2017
Gold fell -6.90 [-0.55%] to 1243.60 on moderately heavy volume, while silver dropped -0.15 [-0.95%] to 15.72 on moderate volume. The buck fell just -0.03%; it had no effect on the metals today.
The FOMC meeting starts tomorrow, with the announcement and press conference on Wednesday.
Gold moved slowly higher until about 8 am, after which is moved steadily downhill until it made a new low to 1242.40 at around 3:15 pm. There was nothing correlated with gold's move lower – except for silver, which followed much the same track. Gold's bounce at end of day was minimal. Today's price drop took gold's RSI-7 down to 21, which is oversold. Candle print was another long black candle, which was a bearish continuation. The forecaster saw something it liked; it rose +0.11 to -0.36 – but that's still a downtrend. The declining volume suggests the selling pressure is drying up.
COMEX GC open interest fell by -393 contracts.
Rate rise chances (Dec 2017) fell to 88%.
While silver fell also, it managed to avoid making a new low. Silver printed a closing black marubozu, which might be a reversal: 38% chance. Silver's forecaster rose too, +0.08 to -0.25. Certainly the pace of the downtrend is slowing somewhat – but like gold, its still a downtrend.
COMEX SI open interest rose by 4,207 contracts. This is similar to what happened last week – large builds in open interest during a downtrend were signs that managed money is jumping in heavily short. If this pattern continues, it is an awesome setup for a short-squeeze reversal rally.
The gold/silver ratio rose +0.31 to 79.11. That's bearish.
The miners were mixed today, with GDX down -0.78% on x volume, while GDXJ rose +0.10% on light volume. Both miners had long upper shadows, which indicate a failed rally. Candles were neutral. GDX forecaster fell -0.11 to -0.19, while GDXJ forecaster rose +0.06 to -0.10. No buy signals, but very shallow downtrends. HUI is also in a slight downtrend. My sense is the miners could go either way from here.
Today, the GDXJ:GDX ratio rose, but the GDX:$GOLD ratio fell. That's neutral.
Platinum rose +0.02%, palladium climbed +0.25%, while copper rallied +1.12%. That's the first up-day for platinum in 7 trading sessions. Copper is slowly recovering from the big drop last week.
The buck was almost unchanged, falling -0.03 [-0.03%] to 93.50. Print today was a doji, which was neutral. DX forecaster fell -0.11 to +0.48; buck remains in an uptrend. Perhaps it was just taking a rest today.
Crude continued moving higher, up +0.69 [+1.20%] to 58.04, following through after last Friday's swing low/forecaster buy signal. Tomorrow we have the API report after market close; if its bullish, it could take crude to new highs.
SPX rallied again, up +8.49 [+0.32%] to 2659.99. Print today was a short white/white marubozu, which had a 32% chance of being a bearish reversal. It was also a new all time closing high. SPX forecaster fell -0.07 to +0.54; SPX remains in a strong uptrend. Sector map shows tech leading (XLK:+0.86%) with financials trailing (XLF:-0.25%); it looked like some sector rotation out of the tax cut winners into the recent losers.
VIX fell -0.24 to 9.34.
TLT fell -0.21%; while it is in a short term downtrend, the chart looks more like it is just moving sideways. TY on the other hand looks more like a genuine downtrend; it is slowly moving lower. I think the rising equity market isn't helping bonds.
JNK rose +0.05%; forecaster issued a buy signal today, up +0.24 to +0.21. I don't see the reason for the enthusiasm, but perhaps the forecaster is relying on movements in other risk assets for its assessment.
CRB rose +0.26%; only 2 of 5 sectors rose – energy (+1.32%) and industrial metals (+1.30%). Still those are the two most closely aligned with PM, so that's good news.
The day wasn't all that eventful - often the market goes into a holding pattern prior to FOMC announcement days. Juniors and silver miners did fairly well today in spite of dropping gold and silver; its an early sign of risk on in the metals. Platinum also wasn't hammered today, and that's a plus too. That has me mildly optimistic going into the FOMC meeting.
Looking past the current meeting, the March 2018 meeting is being given a 59% chance of another 25 bp rate increase. That's probably what most traders will be trying to assess; is that number low, or high? Increased hawkishness is probably bad news for gold.
Also, the balance sheet reduction is set to rise next month, from the current 10 billion/month to 30 billion/month.
We'll know more on Wednesday. 2:30 pm.
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