GOLD PRO WEEKLY, October 05-09, 2015

[Sive Morten]

Fundamentals

Reuters reports Gold jumped more than 2 percent on Friday and silver surged over 5 percent for its best day this year as weaker-than-expected U.S. jobs data dented expectations the U.S. Federal Reserve will raise interest rates this year, triggering short-covering.

Investors raced to cover bearish short bets and some put on new longs after U.S. Labor Department data showed payrolls outside of farming rose by 142,000 last month, much lower than the 203,000 expected.

The data lifted prices off two-week lows, fueling concerns that a China-led global economic slowdown is sapping U.S. economic strength and reinvigorating the moribund bullion market that had been range bound for months.

Traders had braced for a long-expected U.S. rate hike, the first in almost a decade, later this year, which could hurt demand for non-interest-paying gold while boosting the dollar.

"Today could be a game-changer, because nobody expected this sort of a jobs report," said George Gero, precious metals strategist for RBC Capital Markets in New York.

Turnover in December futures in the half-hour after the release pierced 4.8 million ounces, worth about $5.5 billion, the highest for a 30-minute period in over a year.

While much of the volume was likely due to short-covering,

"some people are starting to dip their toes in for long positioning too (for a rate hike)," said Bart Melek, head of commodity strategy for TD Securities in Toronto.

Decent volume in November and December put options, which give the holder the right to sell at a strike price of $1,100 an ounce, suggested investors were protecting their downside risk and hedging their new long futures positions, traders said.

U.S. stock markets rebounded from early losses after the poorer-than-expected U.S. jobs numbers, while the dollar fell to a two-week low against the euro.

CFTC data shows that Open Interest mostly has not changed on 29th on September. At the same time we see significant growth of net long positions. Such sort of combination could appear only if investors have contracted short positions. Also COT report shows that long speculative positions also have been increased slightly. It is interesting to see reaction on NFP data, but we will see it only on next week. But last numbers could mean just contraction of short positions before NFP release.

Technical
Monthly

As we've said last week - it is difficult to make any far going conclusions yet and mostly right now started upside action looks like tactical bounce from strong support area. To get another status market should show significant upside action and form bullish reversal swing.

Recently we we've got impressive rally on gold. On monthly chart it is still looks small and can't change situation yet, but we also see support of this action from investors positions. Yes, this support is mild yet, but it doesn't mean that it can't increase. SPDR fund reports on increase in storages. Right now they stand around 689 tonnes.

Currently we have two bearish grabbers, October month is still small. Market has to move above the grabbers' top to change situation here.

Grabber on monthly chart suggests moving below 1080 area. This is the answer on our questions - how far upside action could climb. To erase this bearish setup - market should erase the grabber first and form reversal swing second, i.e. move above 1300 area.

We have just one long-term pattern in progress that has not achieved it’s target yet. This is VOB pattern. It suggests at least 0.618 AB-CD down. And this target is 1050$. Besides, in the same area we have 1.618 target of most recent butterfly pattern.

If somehow gold will drop below 1050. Next destination will be 890-900$ area - major 5/8 Fib support and Agreement !!! with AB=CD pattern down, the same one that points VOB target.

So, currently despite on solid upside rally, bearish monthly setup is still valid and current upside action is still retracement. Whether it will shift to reversal - we will see...

Weekly

As we've mentioned last time Weekly chart in fact shows tricky picture and makes overall situation a bit complex. Trend here is bullish and we have two in a row bullish grabbers. It means that theoretically we can't take short until these grabbers will fail and trend will shift bearish.
The trick stands around grabbers. The point is they assume taking out of 1180 top, i.e. erasing of monthly pattern. So, we have two opposite patterns in different time frames. Some of them should fail probably.
At the same time we have pattern of another sort. This is upward AB-CD with 1193 target.

Last week we've talked on minor 0.618 target of this pattern at 1155. This target has been reached and now market stands in reasonable pause. And gradually we're approaching to major question - what direction market will choose, what grabbers will fail weekly or monthly. And currently, guys, we do not clear answer. COT data and SPDR shows more or less but support to current rally, which means that it could continue further. Besides, action that we've seen on Friday was significant. Only on Thursday we almost have despaired to see AB-CD continuation as retracement was too deep. But suddenly we've got fast and strong upside return, and now I will not dare to say that upside continuation is impossible.

At the same time this rally simplifies overall situation, because bullish market has no choice here but to continue move up. This is just how AB-CD works. As soon as market has re-established upside action to next target and finished retracement after the first one (this is in fact what we see right now), it has no choice but just continue to it. If it will not do this, then it will be clear signal that upside scenario fails.

So, if market will move above 1155-1165, then we probably will see 1193-1200 area and monthly grabber will be erased. If market will not be able to do it and will start dropping, (especially below 1100 area), this will be clear signal of bearish reversal and road to 1050 target. Butterfly pattern is still possible here...

Daily

Despite the rally, guys, trend here still stands bearish. As market has held above 1100 area - it has kept chance to form bullish butterfly as well. Right now gold stands above MPP that is a positive sign. Situation here is relatively simple. We need clarity and confirmation that market is really bullish. We will get them, if price will shift trend and move above 1160. MPR1 will be additional indicator. If market will break it up it will tell us that sentiment is bullish on gold.
If market will fail to do this, stick inside the long candle, or even erase it - this will be sign of weakness and chances on 1050 target will increase:

4-hour

Intraday charts mostly has informative meaning. Particular interest should be on 1120 area - crossing of MPP, WPP and Fib level. If market will not be able to hold above it - this will be warning moment.

Conclusion
Story was coming to bearish breakout but poor NFP numbers has led to rebound of upside scenario and make it actual again. Currently we need to wait a bit. Right now we have contradictory patterns on monthly and weekly charts and it is difficult to make final conclusion on which one will prevail.
Since market already has re-established upside action, if gold is really bullish, it has to continue this motion. Particularly this moment we will watch for.

The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Good morning,

Reuters reports today Gold held just below a one-week high on Tuesday as investors bet sluggish U.S. nonfarm payrolls data would deter the Federal Reserve from hiking rates this year, although some cautioned that profit taking could hurt the metal in the near term.

The metal is still largely holding on to Friday's 2.2 percent jump, the biggest one-day rise since Jan. 15 following data that showed U.S. employers slammed the brakes on hiring over the last two months.

"This week we think that some form of profit taking may occur after Friday's heady gains post-U.S. nonfarm payrolls," say Howie Lee, an analyst at Phillip Futures.

Lee said there was a reasonably strong resistance at $1,140, above which gold has struggled to hold in the last two sessions.

Markets believe the sluggishness in the U.S. economy, along with weakness in China and volatility in financial markets, could prompt the Fed to hold rates.

Non-interest-paying gold had benefited from ultra-low U.S. rates. But expectations that the Fed will move to hike rates for the first time in nearly a decade has seen the metal lose about 4 percent of its value this year.

However, recent U.S. data has not been robust. After last week's soft jobs report, data on Monday showed the pace of growth in the U.S. services sector decelerated in September as new orders and business activity slowed.

Meanwhile, SPDR Gold Trust , the top gold-backed exchange-traded fund, saw a small outflow of 0.22 tonnes on Monday. That is the fund's first outflow in two weeks.

Asian stocks rose on Tuesday on prospects of a delay in the rate hike. The dollar had a mixed performance against major currencies as the headwind from fading expectations on the Fed's rate hike was countered by positive risk sentiment.

So currently we do not hear something special from market. But the action that we see mostly suggest further upside action. Compares to EUR that has dropped significantly and mostly erased Friday rally, gold, oppositely, keeps it valid and looks like prepares to next jump up.

At the same time trend has not turned bullish yet. Market will meet solid resistance on possible way up - daily overbought, accompanied by MPR1, Fib resistance and preivous top.

On 4-hour chart market is coiling around 5/8 Fib resistance. Recent upside rally could be treated as deep retracement after bearish reversal swing that was formed previously. Thus, situation is not as simple as it seems on first glance. Actually real bullish continuation will happen only if market will exceed 0.618 daily AB-CD target, i.e. move above 1160, or at least will approach to it:

Because currently bearish scenario is also possible, if gold will turn down immediately, say, by diamond pattern... We do not call you to take short, we just show that it is not as obvious sitaution as it seems. We need to more clarity here:

 

[Sive Morten]

Good morning,

Reuters reports today - Gold climbed to its highest in nearly two weeks on Wednesday, as more sluggish U.S. economic data supported views that the Federal Reserve would delay a rate hike to next year.

Spot gold had risen 0.4 percent to $1,151.60 an ounce by 0643 GMT, after earlier hitting $1,152.90, its highest since Sept. 24. Liquidity was thin in Asian hours with top consumer China out on a holiday.

Data on Tuesday showed that U.S. exports took a hit from an ailing global economy in August and imports from China surged, fuelling the largest expansion of America's trade deficit in five months.

The data, following a weak nonfarm payrolls report last week, has triggered a drop in the dollar and pushed expectations of a rate hike to next year.

"We have to suspect that as U.S. macro data starts to deteriorate, the dollar will likely continue to weaken from here, providing further upside to impetus for gold," said INTL FCStone analyst Edward Meir.

A softer dollar would make gold cheaper for holders of other currencies, while a delay in rate hike could also support non-interest-paying bullion.

Gold has benefited in recent years from ultra-low rates, which cut the opportunity cost of holding the metal.

Fed Chair Janet Yellen said last month she expected the U.S. central bank to begin raising rates this year, but weak U.S. economic data since then and caution about the global economy has prompted many to push out expectations.

The International Monetary Fund cut its global growth forecasts for a second time this year on Tuesday, citing weak commodity prices and a slowdown in China and warned that policies aimed at increasing demand were needed.

The Fed should be communicating its views of the economy well enough that markets will not be taken by surprise by an eventual interest-rate hike, San Francisco Fed President John Williams said on Tuesday.

Elsewhere, the value of China's gold reserves stood at $61.2 billion at the end of September, down from $61.8 billion at end-August, the People's Bank of China said on Wednesday.

Gold has made one step closer to possible upside breakout. As we've suggested yesterday, hardly market will pass 1160 area fast. This is cross of solid resitance levels, such as WPR1, MPR1, overbought and Fib levels and targets. May be market will spend some time around it.

That's why we will watch for couple f moments around 1160. First is - how stable market will hold just under 1160. Real bullish market will flirt right under it, without strong retracement down. Second, we will be watching for deep to buy.
For example, major retracement probably will start when market will complete this 4-hour AB=CD pattern:

 

[Sive Morten]

Good morning,

Reuters reports today Gold fell from near two-week highs and silver slumped 3 percent on Thursday, as Chinese investors sold the precious metals to take profits on return from a week-long holiday.

Spot gold eased 0.3 percent to $1,142 an ounce by 0635 GMT. The metal had climbed to $1,153.30 in the previous session, its highest since Sept. 24, before closing 0.1 percent lower as the dollar gained.

Silver fell as much as 3.2 percent before recovering slightly to trade down 2.7 percent at $15.63. Before Thursday, silver had rallied for four days, hitting a 3-1/2-month high earlier this week.

Gold gained $30 an ounce during China's holiday between Oct. 1 and Oct. 7, while silver gained about $1.50 in the same period, as the dollar weakened on sluggish U.S. economic data.

"There is some profit-taking from the Chinese as both the metals moved considerably higher when they were away," said a bullion trader in Sydney.

Platinum and palladium also fell.

Gold's losses were capped by views that the Federal Reserve would delay the first rate hike in nearly a decade until 2016, and the trader said he was bullish about prices in the near term.

"After the weak nonfarm payrolls report last week, expectations for a U.S. rate hike have been pushed to early next year. So the market does look good for now," he said.

The U.S. central bank opted not to hike rates in September in the wake of cooling global growth and fears of a deepening slowdown in China.

Fed Chair Janet Yellen said a rate hike would come this year, but a recent string of weak U.S. economic data has prompted the market to push back expectations.

The minutes from the Fed's last meeting in September will be released later on Thursday, with markets watching out for U.S. central bank officials' views on the global economy and the impact on U.S. monetary policy.

A delayed rate rise could support gold in the near term. The metal had earlier come under pressure from expectations that the Fed may raise interest rates this year, potentially lifting the opportunity cost of holding non-yielding bullion.

Elsewhere, SPDR Gold Trust, the top gold-backed exchange-traded fund, said its holdings fell 0.26 percent to 687.20 tonnes on Wednesday.

So, gold has taken a pause in upside action as it gradually is entering in resistance zone of MPR1+WPR1, overbought and Fib level.

Although on 4-hour chart we see some minor retracement, but it is not the one that we've discussed yesterday. Our retracement should come after completing of this AB=CD pattern

Still, reracement as it stands right now is acceptable. Market is re-testing previous consolidation, but we do not want to see deep retracement and solid drop. Since right now gold stands in potential CD leg which is extension and it should follow right to the target. Too deep retracements could put under question this bullish perspective

 

[Sive Morten]

Good morning,

Reuters reports Gold climbed about 1 percent on Friday in a delayed reaction to minutes of the Federal Reserve's last policy meeting that showed the U.S. central bank was in no hurry to hike rates.

The minutes pointed to a deeply cautious Fed even before subsequent economic data showed a sharp slowdown in hiring by U.S. employers. Most policymakers, however, thought the Fed's first rate hike in a decade should still come this year.

"Gold was choppy following the U.S. FOMC minutes that did not give a clear indication of whether or not the Fed is poised to raise interest rates this year," said analysts at ScotiaMocatta, referring to the Federal Open Market Committee.

Asian stocks rose on Friday and the dollar nursed losses as investors pared bets that the central bank will hike interest rates this year given the dovish minutes.

"The tone from the FOMC minutes was slightly more dovish, although this wasn't too surprising," said ANZ. "Overall, the FOMC still see risks to the downside for U.S. real GDP and inflation forecasts, with recent global growth and financial market developments exacerbating these downside risks."

A delayed rate rise could support non-interest-paying gold, although uncertainty could weigh on prices in the near term.

Gold is up 0.8 percent for the week, after hitting a near-two-week high earlier in the week.

Among other precious metals, silver was set for a near-4 percent weekly jump, after hitting a 3-1/2-month high on Wednesday on a softer dollar and expectations of a delay in a U.S. rate hike.

Platinum was on track for a 6-percent gain for the week, its best weekly performance since September 2012. The gain follows a drop in prices to a near seven-year low last week, as investors believed the Volkswagen emissions scandal would reduce demand for diesel cars, in which the metal is used in catalysts.

Palladium was headed for its fifth straight weekly gain.

Gold market mostly supports bullish scenario and does not show anything "not bullish suitabe". Personally, I do not think that all this mess is based on Fed statement or Crude storage in US. Geopolitical tensions and risks are risen and this is major reason f oil price grow as well as gold. It will be interesting to take a look at COT report... It seems that Russian bombing are hit some illegal channels of bargain crude oil delivery, particularly to Turkey. It is difficult to explain its scream by just 2 seconds air space crossing by russian plane. This happens almost every day in many countries but nobody screams in such manner. It seems that this is just pretext but reasons are not public. Anyway, for us major point is price of commodity and my opinion that it is driven by Middle East tension now. Since this situation is far from resolving - chances on further support of gold and oil prices exist.

On daily chart market is re-established upside action after minor retracement. This is our neccesary "bullish" condition among others:

On 4-hour chart market is also following with our logic of bullish market - no solid retracement until it will hit major AB=CD target. It Gold holds with it. Just minor retracement, as we've suggested:

If we will be right, then final upside leg could take the shape of Butterfly on hourly chart, probably 1.618. It stands slightly higher than AB=CD target, but market could reach it as soon as stops will be triggered:

That's being said, right now we 're waiting for final jump to 1165 area and then for retracement that we will try to use for long entry probably