GOLD PRO WEEKLY, August 15 -19, 2016

[Sive Morten]

Fundamentals

(Reuters) Gold turned slightly lower as the U.S. dollar pared losses on Friday, with investors grabbing profits after the metal jumped more than 1 percent following U.S. retail sales data that were unexpectedly flat in
July.

Spot gold was down 0.3 percent at $1,334.36 an ounce by 2:50 p.m. EDT (1850 GMT). It was on track to finish the week up 0.04 percent. Spot gold rallied as much as 1.4 percent to $1,355.80 after Friday's retail reading for last month surprised economists and suggested consumer spending was cooling after the second quarter's brisk 4.2 percent rate of increase.

"Real money profit-taking sparked a sell-off that saw gold surrender the day's gains as sideways trade in gold over the past few weeks are encouraging some investors to deploy capital elsewhere," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

"Prices had a new incentive to break higher, with a weaker dollar and lower than expected data from the U.S., which should further discourage the Fed to do anything on rates," Saxo Bank senior manager Ole Hansen said. The most active U.S. gold futures for December delivery settled down 0.5 percent at $1,343.20.
"As long as gold stays above $1,300 there is no reason why funds holding big longs should worry too much."

The dollar fell 0.6 percent against a basket of main currencies after data prompted investors to roll back
expectations on when the Federal Reserve will raise rates, but was down around 0.2 percent later in the day.
Gold is highly sensitive to rising U.S. interest rates, as the opportunity cost of holding the non-yielding asset increases while boosting the dollar, in which it is priced. Federal funds futures implied traders saw a 43 percent chance the Fed would raise rates at its Dec. 13-14 policy meeting, down from a 47 percent chance before the data was released. Minutes from the Fed's July meeting will be released on Aug. 17.

COT Report
CFTC data doesn't shows something really new. Here we just see that investors keep longs as net- long position as open interest stand at all time highs. Thus, we could make only the same conclusion that gold has limited upside potential and has no ability to start new long term bullish trend. It means that currently is not good sitation for taking strategical long positions.

Technicals
Monthly

August month right now stands inside one to July and mostly keeps our analysis the same, so it is difficult to say something really new here.

Technically current upward action started in Dec 2015 is first one after long term of decreasing and it should be interrupted by deep retracement sometime. Probably it should happen but this potential downward action has a great chance to become just a retracement. Overall political and financial situation in the world probably will not give a chance to relax. Thus, we have a positive long-term view on gold market.

As market slightly has moved above YPR1 and our K-resistance area, something is starting to form here, I mean pattern by which long-term global trend could change on gold.

Take a careful look at the picture - could you recognize here possible reverse H&S pattern? Besides the shape itself, some features here that in general typical for H&S. For example, relation between head and shoulders - 1.618. Butterfly... very often first part of H&S takes the shape of butterfly pattern...

Finally take a look at action on downward slope and upward one of the head - last move down was slower than current move up. All these moments point on possible H&S pattern here.

If we really will get it - then we could make an assumption on possible depth of retracement. Now the bottom of shoulder stands approximately around 1160 area... Currently we could only gamble what event could push gold as low as 1160 again, but probably something will happen.

Now market is approaching to major, all time 3/8 Fib resistance @ 1380 level. First reaction already has followed, as gold has dropped. But this drop has not taken the shape of tendency yet. Let's see how situation will change in coming month. So, on monthly time scale we will watch for deep retracement. As it could be reverse H&S pattern, it should start somewhere around neckline - 1380-1400. This in general agrees with overall situation and COT report. Gold could spike up temporally, but then solid chances that price will turn down. This action could take 6-9 months or may be more:

Weekly

As we've said last week based on analysis of monthly chart, we probably should be focused on searching downward reversal patterns, that could confirm (or destroy, may be) our thoughts on monthy pattern.

Last week we've said - It seems that something is forming here, some really important thing will follow, and probably soon, but not yet, as market just has finished upside action. Initially we've made an assumption that it could be H&S pattern, because current top stands precisely at 1.618 extension of tprevious swing up and right at top we've got bearish engulfing patter.

But last week we've got opposite pattern that could adjust or even cancel this idea of H&S. This is bullish stop grabber. What changes could happen by this pattern? Most friendly one is just W&R of previous top, if market just will grab stops above the top and drop again down. This will not cancel overall idea of H&S pattern, but postpone it for week or two...

More radical consequences will happen, if market will break 1380 top and hold there. In this case we will have to review our medium term strategy and just wait for new inputs and patterns to understand what is going on.

Currently, it seems that shy jump above 1380$ and return back looks more logical compares to stable upside trend, just because gold has not reached neckline on monthly chart and major 3/8 resistance. Thus, it could happen so that market will touch it and then take another chance to turn down. Especially, taking in consideration high levels of net long speculative positions, stable upside trend right now looks doubtful.

Finally, grabber just could fail... this is also possible.

Anyway, weekly chart right now gives us very important information - do not go short until situation around weekly grabber will be resolved. And another issue that stands with tight relation with previous one - what will happen when minimal target of this grabber will be hit.

As NFP data was really positive gold has dropped slightly lower but not sufficient to destroy the grabber. We mostly should treat this move down as retracement by far. Thus, weekly chart has not changed much after NFP release and mostly shows the same setup that we had last week.

It keeps valid bullish grabber. And in general, guys, it looks like that market is tired - lazy reaction on NFP, almost no reaction on Retail Sales. Usually this is happens, when traders just keep long-term positions and do not want to change anything. Some significant push is needed to force gold drive in any direction. For us bullish grabber here has major importance by 2 reasons. Until it stands valid - gold keeps chances on W&R of the top. Second - as soon as it will fail - it could mean that gold has started action with H&S pattern on weekly chart:

Daily
Nominal trend has become bearish on daily chart. But gold mostly coiling around MPP. Long tales of last 3 sessions, suggest that some sellers have appeared and do not let market to climb higher.

At the same time, as trading range has narrowed significantly, last week action has almost no impact on setup that we have here. Major pattern that we have is a butterfly "sell" with 1390 destination point. This butterfly agrees with weekly bullish grabber.

As any pattern - it could either fail or reach the target. It is all clear about the target. Bullish combination will fail only if market will drop below 1300 area. If this will happen gold will destroy as daily butterfly pattern, as weekly bullish grabber and probably will put foundation for stronger and more extended downward action.

Other words speaking - if this drop below 1300 will happen, it will mean that gold has started our anticipated retracement without any W&R of 1380 top.

All other action that stands between 1300-1380 has not special meaning for daily chart. On intraday ones, yes, we could find may be even some trading setups, but not on daily...

That's being said if you have bullish view you could stick with this butterfly and try to trade it as we usually do.
If you're bearish - you better to do nothing, until gold either wash out 1380 tops or erase them by drop below 1300 area:

4-hour

So, on intraday charts we continue our dancing with tactical patterns, i.e. wide triangle and minor butterfly. Here we have new inputs by result of last week:

As market has popped up early and has not touched lower border of trianle - gold has created precedent for another minor butterfly. This smaller pattern has 1.618 extension target at the same level as daily butterfly.

But, right now this butterfly stands under question. Gold reaction on Retail Sales data reminds "rejection of price", and it looks like bearish engulfing pattern. This new combination has no menace to triangle and daily setup, but it could erase this smaller butterfly. As a result, although we expected to see upside breakout earlier, we probably again will have to wait, since if gold will drop below 1330 lows it will destroy butterfly and make fluctuation inside triangle of ordinary shape.

That's being said, it looks like major action on gold market will be postoped again, and price will spend more time inside triangle.

Particularly speaking, downward breakout of 1330 area could take the shape of butterfly "Buy" that could lead price directly to the lower border of triangle:

That's being said, it is better to think about bullish position either at the bottom of wide triangle, when this downward butterfly will be completed, or on upside action, as soon as it will be erased.

Conclusion:
We continue to keep long-term bullish view on gold market. But now chances on deep retracement are very high due combination of as sentiment as technical moments. Partially we even could recognize thrilling pattern on monthly chart which brings more clarity and shows definite levels to watch for. Now is the major question whether it will be formed or not.

In short-term perspective gold probably will spend more time inside of wide triangle on 4-hour chart. And we have no choice but continue to monitor this action. So, we call you to be patient. The first stage of our trading plan suggests resolving situation with small bearish butterfly, only after that bulls could start second stage - searching chance to go long, if they want. Bears should sit on the hands a bit longer, while daily and weekly patterns will be either completed or erased.

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) Gold rose for a second day on Tuesday as the dollar weakened on lower expectations of a U.S. Federal Reserve interest rate hike this year. Spot gold was up about 0.7 percent at $1,348.86 an ounce at 0639 GMT. The metal rose 0.2 percent on Monday. U.S. gold rose 0.5 percent to $1,354.70 an ounce.

"The gold market is in the balance of long and short buyers. Both sides are waiting for more economic data to determine the trend," said Jiang Shu, chief analyst at Shandong Gold Group. "Most investors are not very aggressive as they are not certain about which road they should choose." Markets will look to U.S. data later in the day including consumer prices, housing starts and industrial output for another chance to gauge the health of the economy.

Spot gold may revisit its Aug. 12 low of $1,333.50 per ounce, as it could have completed a bounce from this level, Reuters technical analyst Wang Tao said. "Initial resistance for gold is at the important $1,350 level, whilst first support comes in around $1,335-1,336," trading firm MKS Pamp said in a note.

Central bankers and governments must come up with new policies to buffer their economies against persistently low interest rates that threaten to make future recessions deeper and more difficult to avoid, San Francisco Fed President John Williams said. The dollar hit a one-month low against the yen on Tuesday, staying on the defensive after recent U.S. economic data were seen likely to limit the prospects of a near-term Fed interest rate hike.

The dollar index was down 0.6 percent to $95.091 against a basket of currencies. A stronger dollar discourages gold buying by making the metal more expensive in other currencies. Asian shares rose to one-year highs, expanding their gains this year to 10 percent, supported by a jump in oil prices and investor expectations of an extended phase of easy monetary policy around the globe.

Soros Fund Management LLC sharply cut its shares in gold in the second quarter, while New York-based Paulson & Co, led by John Paulson, kept its stake in SPDR Gold Trust unchanged, U.S. Securities and Exchange Commission filings showed on Monday.

So, on Gold market although we see some upward action, but it is not sufficient yet to make fargoing conclusions. Price is trying to move higher but still stands inside the range of last week. All patterns that we've disccussed here are valid - butterfly, AB-CD, potential bullish dynamic pressure. Invalidation point for daily bullish setup is 1300 lows:

As market has held at the edge and turned up again - all patterns on 4-hour chart are valid as well.

But tactically, gold has not quite destroyed yet chances on drop. This picture shows that although upward action stands under way - gold has not taken out previous tops and theoretically downward butterfly is still valid. Our trading plan that we've prepared in weekly research suggests getting answer on this riddle first and make action second. Thus, we said, that long postition could be discussed only if market will erase this potential butterfly. Probably we should get solution today. Meantime let's get more patience and just wait a bit more:

 

[Sive Morten]

Good morning,

(Reuters) Gold edged lower on Wednesday as hawkish comments from U.S. Federal Reserve officials raised bets on a rate hike this year, with traders waiting for minutes from the last Fed policy meeting for more clues.

New York Fed President William Dudley said a rate hike in September was possible, while Atlanta Fed President Dennis Lockhart said the U.S. economy is likely strong enough for at least one rate increase before the end of 2016, with two a possibility.

Spot gold was down 0.3 percent at $1,341.84 an ounce at 0654 GMT. The precious metal rose 0.5 percent on Tuesday. U.S. gold fell 0.7 percent to $1,346.80 an ounce. "The comments (on rate hikes) are certainly pricing on gold," said ANZ analyst Daniel Hynes. Gold investors, however, have held relatively well despite
these issues cropping up, indicating a broader level of support for this market, Hynes added.

Spot gold looks neutral in a range of $1,333.50-$1,358.01 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.

Markets will seek fresh direction from comments expected from St. Louis Fed President James Bullard and the release of the Fed's July policy meeting minutes later in the session, as macro economic data from the world's largest economy has been mixed so far.

"While the next round of Fed rate hike is not seen far ahead, there is higher possibility of a break down into
$1,200-1,215 for gold," said Moses Harding, an independent strategist in financial services and global markets and an advisor to board at SBM Holdings Ltd, Mauritius.

The dollar edged away from 7-week lows against the yen and euro on Wednesday. The dollar index was up 0.2 percent at 94.989 after losing 0.8 percent on Tuesday, which was a 7-week trough. A stronger dollar discourages gold buying by making the metal more expensive for holders of other currencies.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.19 percent to 962.23 tonnes on Tuesday.

So, on daily chart we have the same picture -gold is still coiling around MPP. It challenges 1360 level for 4 times, but every time pulled back. As you can see gold mostly stands inside the range of NFP candle for 2nd week and it seems that exit out from it will be important sign of further direction. Today we do not have some really improtant statistics, only Fed minutes could make some impact:

On 4-hour chart we have 2 imporatnt moments. First - Gold has formed bullish grabber. If it will keep it valid in nearest hours, then it could help us much. Since this grabber suggests taking of 1360 top and this will mean out from NFP candle range. This could become important clue to further direction:

Second - gold has erased potential bearish butterfly, that we've discussed yesterday and is forming smaller triangle inside of larger one. Thus, we probably stand close, when direction will be chosen:

That's being said - monitor grabbers, and minor triangle on 4-hour chart.

 

[Sive Morten]

Good morning,

(Reuters) Gold rose for a fourth straight session on Thursday, buoyed by a weaker dollar after minutes from the U.S. Federal Reserve's July meeting showed several members expressing caution over hiking interest rates soon. The minutes showed that members of the Fed's rate-setting Federal Open Market Committee were generally upbeat about the U.S. economy and labour market, but several said any slowdown in future hiring would argue against a near-term hike.

Spot gold was up 0.3 percent at $1,351.94 an ounce at 0645 GMT. U.S. gold climbed 0.6 percent to $1,357.20 an ounce. "Most market participants are now expecting a December rate hike at the earliest. That means that people are on the side of buying gold," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo. "Nobody would be willing to sell gold aggressively even if there is a hike in rates, with the U.S. presidential elections in November creating uncertainty."

Spot gold is biased to rise above a neutral range of $1,337.22-$1,358.01 per ounce, and could climb into a range of $1,365-$1,373, according to Reuters technical analyst Wang Tao.

The dollar index, which measures the greenback against a basket of six major currencies, stood at 94.448, after plunging to as low as 94.385, the lowest in more than seven weeks. The index has lost over 1 percent so far this week. A stronger dollar discourages gold-buying by making the metal more expensive for holders of other currencies. "There were mixed expectations on whether there would be one rate hike or two. Now, we think most likely it will be none," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 957.78 tonnes on Wednesday. CME on Wednesday lowered COMEX 100 Gold Futures (GC) maintenance margins for speculators by 10 percent to $5,400 per contract from $6,000 for August and September 2016.

So, gold still stands in a range of NFP candle, but it seems that real struggle stands beyond the picture. Market is churning sell-offs. Only yesterday gold was below MPP, but after Fed minutes it has moved in upper half of the range and it seems that selling has become weaker:

As a result gold keeps chances on bullish scenario that we're waiting for. Also it keeps valid all our thoughts on short position - don't be short yet.

Another pattern that could indicate bullish dynamic pressure we see on 4-hour chart. Take a look that as 1360 resistance tops stand flat - bottoms move higher and higher. This could be a sign that selling is becoming weaker and could indicate bullish dynamic pressure:

So, although we do not have yet the solution of current situation, but probably it already stands somewhere around...

 

[Sive Morten]

Good morning,

(Reuters) Gold fell on Friday for the first time this week as hawkish comments from U.S. Federal Reserve
officials renewed bets on a U.S. rate hike this year, but was still on track to end the week with modest gains. Spot gold was down 0.3 percent at $1,348.31 per ounce at 0655 GMT, but up 0.1 percent for the week. U.S. gold dropped 0.3 percent to $1,351.10 an ounce.

San Francisco Fed President John Williams on Thursday joined a growing chorus of his colleagues signalling support for a U.S. interest rate hike in coming months. New York Fed President William Dudley reinforced his confidence on a possible interest-rate hike for a second time in the week.

Dallas Fed president Robert Kaplan, however, saw limited room to manoeuvre on rate hikes. Reports showed the number of Americans filing for unemployment benefits fell more than expected last week, while
manufacturing activity in the U.S. Mid-Atlantic region saw a mild improvement this month.

"There is no clear direction from the Fed. Adding to that there are mixed views from the Fed officials," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.

Members of the Fed's rate-setting Federal Open Market Committee were generally upbeat about the U.S. economy and labor market, but several said any slowdown in future hiring would augur against a near-term hike.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. Signals are neutral for spot gold as it is stuck in a range of $1,337.22-$1,358.01 per ounce, Reuters technical analyst Wang Tao said.

"The money going into the ETFs (exchange-traded funds) looks to be slowing down a bit and it feels that the market has been feeling a bit heavy on the longs," said a Sydney-based precious metals trader.
"Maybe we need a little bit of washout. Won't be surprised if we touch new lows of $1,320."

Holdings of SPDR Gold Trust, the world's largest gold-backed ETF, fell for a second day. The index of the dollar against a basket of six major currencies was up about 0.2 percent at 94.359. A stronger dollar discourages gold buying by making the metal more expensive for holders of other currencies. European Central Bank rate setters agreed not to discuss any policy change at their July meeting and to keep market hopes for more stimulus in check, minutes showed on Thursday.

So, on gold market is nothing really new to discuss. We still stand with our trading plan. First stage - some upside spike to 1390-1400$ area. Second - deep long-term retracement to 1160-1180 area. Now we're waiting for completion of first stage. But market again obliges us to be patient a bit more...
Overall techical picture looks bullish. As market has completed upside brexit AB=CD - it has turned not to downward retracement but to triangle consolidation. Price action inside of triangle also doesn't exclude upside breakout. Actually this tactical scenario will be valid, until market holds above 1300 area...

On intraday charts it seems that selling power becomes weaker, as it can't push market to equal lows and each low becomes higher and higher. So, hardly we could get something important today, but let's hope that on next week market will resolve this situation: