GOLD PRO WEEKLY , February 27 - 03, 2017

Sive Morten

Special Consultant to the FPA
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Fundamentals

(Reuters) - Gold reached its highest in 3-1/2 months on Friday as the dollar fell to a one-week low after the new U.S. Treasury chief poured cold water on the "Trumpflation trade" that had boosted the greenback this year.

Treasury Secretary Steven Mnuchin said on Thursday that any steps U.S. President Donald Trump's administration takes on policy would probably have only limited impact this year, though he wants to see tax reform passed by August. The comments suggested much work was still needed on the sweeping tax plan that Mnuchin called his main priority, and which investors had bet would stoke growth and inflation this
year.

"We've got a vacuum of (U.S. domestic) policy, real (interest) rates going down, the dollar going sideways and geopolitical (jitters) around the world ... all helping gold," ICBC Standard Bank analyst Tom Kendall said.
"There is apparently a move of institutional investor money into gold and there are usually very good reasons for that."

Spot gold was up 0.6 percent at $1,256.75 an ounce by 2:26 p.m. EST (1926 GMT), having touched its highest since Nov. 11 at $1,260.10 earlier, zeroing in on the 200-day moving average. It was on track to finish the week higher for the fourth straight week. U.S. gold futures settled up 0.55 percent at $1,258.30.

Tempering gains in bullion, a poll on Friday suggested French presidential candidate Emmanuel Macron would beat far-right leader Marine Le Pen, who has promised a referendum on European Union membership.
Key global stock markets fell as investors scaled back bets that Trump's policies would benefit economic growth. The dollar later pared losses.

Holdings of the largest gold-backed exchange-traded fund, New York's SPDR Gold Trust , have risen more than 5 percent this month on geopolitical risk.

"These dollar-denominated and perceived safe-haven precious metals have risen during a time when Wall Street has repeatedly hit new all-time highs and despite the dollar holding near its multi-year highs," said Fawad Razaqzada, technical analyst for Forex.com, adding that precious metals appeared poised to rise
further in the coming weeks.

"The metals' remarkable performance may suggest that investors are positioning themselves up for a major risk-off event – such as a collapse in the US stock markets."


COT Report

Recent CFTC data mostly supports current upside action. SPDR fund storages stand stable last week and has not changed, while COT report shows that net long position has increased slightly as well as open interest. It means that traders have taken new long positions. Overall picture looks not as bright as on EUR, but still last 2-3 weeks sentiment analysis mostly supports rally that we see:
upload_2017-2-26_13-11-40.png


Technicals
Monthly

As gold shows no return back to 1100 lows - it keeps reversal moment of our H&S pattern pretty nice by far.

But here we come to most difficult moment. Mostly because fundamental background for gold market is very blur. D. Trump victory and uncertainty around its economy policy, massive political turmoil in Europe and foreign affairs do not let us to estimate clear fundamental picture by far. Although price behavior, short-term sentiment and commodities performance mostly supports idea of bullish reversal pattern here (at least now). At the same time many world top analysts (such as Barnabas Gan) worry about more active Fed policy and think that gold could finish 2017 around 1100$. But Fed is out of our control and prediction.

Right now we can make just some suggestions. As we've said technically recent upward action started in Dec 2015 is first one after long term of decreasing and it should be interrupted by deep retracement sometime. Now this retracement stands in place. It is really big chance that gold stands in a stage of big trend changing from bearish into bullish. US economy shows inflation growing. As we've estimated, commodities across the board have turned to growth.

Besides, any Trump protection policy will be accompanied by big spending and expenses, this will lead to grow of inflationary expectations and could lead even to more hawkish Fed policy. Thus, we mostly gravitate to idea that gold now stands not in pause of bear trend, but on the eve of new bull trend. Also we expect big structural shifts in EU economy, diminishing Brussels governing role, taking direction on convergence with Russian economy, and through Russia economical infrastructure - with Middle East and Asia.

But our technical "deep" retracement still could be different. Currently, as market stands at the edge of 1170 Fib support, we could talk on 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...

That's being said gold stands at the area where the bottom of right shoulder should be formed. Thus, our first step on this long-term time frame has been completed - "we suggest further drop on gold, at least to 1160-1180 area."

As we've said almost month ago - we're coming to second step how we've specified it - "watch for validity of H&S pattern." Rally that we see right now is not bad, it holds rather well, but it seems that it is still lack of confidence a bit.

Here we come to idea of another reversal pattern. If retracement will be too deep, back to 1000$, gold still will keep chances to reverse up, but by another reversal pattern - Double Bottom.

So, as you can see here we've got big journey ahead while we will estimate what we really have - either H&S or Double Bottom. It means that we should be extra careful to patterns that will be formed on daily chart.
gold_m_27_02_17.png


Weekly

Recent upside rally confirms that our suggestion on upside continuation was correct, as gold on a way up erased B&B "Sell" potential setup and reversal week.
As market is not at overbought - next logical destination point is 1278 Fib resistance. Price has no barriers on a way right to it. Also pay attention that overall thrust up has 8 bars and is suitable for DiNapoli directional patterns. For example, gold could form B&B "Buy" right around 1278 area if reaction on resistance will follow.

In general gold stands well on long-term weekly chart - channel has broken up and re-tested by 1.618 AB=CD target. Then gold has turned up again, erased reversal week and B&B and re-tested 1251 lows. This action looks very well from bullish point of view. Long-term bullish crucial point is 1130 lows. Logic is simple here. From perspective of H&S pattern - gold has completed all necessary targets to form right shoulder - downward AB-CD 1.618 extension has been completed and also price has reached 5/8 major Fib support. It means that if gold will drop below this level - it will mean that H&S has failed.

gold_w_27_02_17.png


Daily

So, 1245$ area consolidation was absolutely reasonable, this was rather strong resistance and Agreement area. It includes MPR1, Fib level and minor AB-CD target. But right now gold has broken through it. Next logical destination is AB=CD target and Agreement around 1278 weekly Fib resistance.

Still, daily overbought level stands rather close to current market and actually 1278 area is slightly above it, thus, it is more probable that gold will not move straight up to the target, but will should gradual performance.
But 1278 area has good chances to be hit on coming week.

Another important issue here (we've mentioned it on Friday) - gold has moved above MPR1. It tells that gold stands not just with upside retracement, but in new bull trend. As gold likes to re-test previous tops on a way up during retracements - re-testing of broken 1245 area seems reasonable:
gold_d_27_02_17.png


4-hour

The first pause on a way up market could take rather soon. Although we thought on Friday that retracement will start somewhere around 1255, as multiple intraday targets were hit there, gold has climbed slightly higher. But right now 1.618 butterfly target almost has been hit and on Monday gold could start retracement down.

As you can see we have solid support cluster around previous top that supports an idea of re-testing broken levels. Thus, 1240-1245 area includes K-support, previous tops and WPP. This is a trading plan for Mon-Tue - completion of butterfly and retracement to 1240 area:
gold_4h_27_02_17.png



Conclusion:
As market has completed first step of our long term analysis - dropped to 1170 area, now we're turning to second step - estimating of validity of monthly H&S pattern. Currently we still think that gold has fundamental background to start long-term bullish trend and two patterns could be formed. Either H&S or Double bottom. As Januray close and Friday action stands strong - gold keeps good chances to form H&S pattern still. At least currently we do not have any visible reasons to doubt upside action. We agree that more agressive Fed policy could stop this rally, as well as agressive D. Trump stimulus program could lead to faster inflation. These issues are beyond of forecasting. That's why we will take them in consideration if&when they will appear.

In shorter term perspective our trading plan is based on large hourly butterfly and daily AB-CD patterns. Thus, we suggest retracement back to 1240-1245 area in the beginning of the week and upside continuation to 1278 target closer to weekend.


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.
 
Good morning,

(Reuters) - Gold was steady on Tuesday, after falling from a 3-1/2-month high in the previous session, as investors awaited a speech by U.S. President Donald Trump later in the day for more clarity on his economic policy.

Spot gold was little changed at $1,252.90 per ounce at 0241 GMT. The metal hit its highest since Nov. 11 at
$1,263.80 in the previous session on Monday. U.S. gold futures fell 0.4 percent to $1,253.80.

Investors are looking towards U.S. President Donald Trump's policy speech to a joint session of Congress on Tuesday night where he is expected to provide clues on his plans to cut taxes.

"We will have to see what happens later tonight and through Wednesday post (Trump's) address, but we suspect that any “Trumpflation” type of reaction will be relatively short-lived," said INTL FCStone analyst Edward Meir.

"Many of the proposals need to be translated into actual legislation and also need congressional approval...it is unclear whether there exists enough support, even in the Republican Party, to push through much of Trump’s agenda," Meir said.

President Donald Trump on Monday said he would propose a budget that would ramp up spending on defense, but seek savings elsewhere to pay for it.

"A possible setback could set in (gold) over the next 24 hours, but we still could end the week on a firmer note, especially if Janet Yellen’s testimony on Friday lays open the possibility that the Fed will likely pass on a rate move in March," Meir said.

A delay in an interest rate hike by the U.S. Federal Reserve would be positive for non-interest bearing bullion while also keeping the dollar weaker, making the dollar-denominated yellow metal more appealing to buyers paying in other currencies. However, there are still some Fed officials pushing for a rate increases as soon as next month. The U.S. central might need to raise interest rates in the near future to avoid falling behind the curve on inflation, Dallas Fed President Robert Kaplan said on Monday.

Prices of U.S. short-term interest rate futures fell on Monday as traders raised their expectations the Fed will
increase rates either in March or May after Kalpan's comments.

"Persistent speculation about Greek fiscal policy and looming elections in the Netherlands and France are contributing to the geopolitical uncertainty on the part of the European continent," Heraeus Metal Management said in a note. "We continue to see gold well supported – overcoming resistance at $1,249 (per ounce) may suggest higher prices. We see the next resistance level at $1,278 and also the $1,300 mark is moving into the sight of investors."

Spot gold still targets $1,278 per ounce, following its break above a resistance at $1,249, Reuters Technical analyst Wang Tao said.


Gold market 100% matches to our expectation by far. As price has completed intraday butterfly "sell" pattern - it has turned to retracement. Today we should not expect any solid action, as market waits for Trump's speech to Congress. It will start when markets will be closed already, thus, major impact we will get only tomorrow. Before speech investors could fix some profit, as upside rally was rather solid. So our retracement that we've discussed in weekly research is started. Our next target is 1278 Agreement resistance.
gold_d_28_02_17.png


Potential destination point of retracement is K-support area around 1245 level and previous tops:
gold_4h_28_02_17.png
 
Good morning,

(Reuters) - Gold fell on Wednesday as the dollar strengthened on hawkish comments overnight from U.S. Federal Reserve officials, while an eagerly awaited speech by U.S. President Donald Trump contained few specifics or surprises.

Spot gold had dropped 0.5 percent to $1,244.93 per ounce by 0345 GMT. The metal hit its highest since Nov. 11 at $1,263.80 on Feb. 27. U.S. gold futures fell 0.8 percent to $1,243.60.

Trump pledged to overhaul the immigration system, improve jobs and wages for Americans and promised "massive" tax relief to the middle class and tax cuts for companies.

"The speech was very light on detail ... I suspect it has a bit turned into a damp squib. There were no new policy announcements there and a lot of it is already built into the U.S. dollar," said Jeffrey Halley, senior market analyst at OANDA. "I would expect U.S. dollar to weaken in the coming hours and things like gold and oil should rally."

The president had already said on Monday that he would propose a budget that would increase spending on defence while seeking savings elsewhere.

The dollar index was up 0.4 percent at 101.480. A handful of Fed policymakers on Tuesday boosted
expectations for a March U.S. interest rate incre ase, with comments that suggested rate-setters are worried about waiting too long in the face of pending economic stimulus from Washington.

The comments sparked a flurry of selling in the bond market, with the two-year Treasury yield jumping to its highest level since December. Interest rate futures implied traders saw nearly a 57-percent chance the Fed would raise rates at its March 14-15 meeting, up from roughly 31 percent late on Monday, and around 20 percent a week ago, according to Reuters data.

"I believe that the March Fed meeting is live now and we may even see a rate hike. Maybe the markets will turn their attention towards that," Halley said. "But, Fed Chair Janet Yellen speaking on Friday should be
quite important now. If she is towards the hawkish side, then the March meeting will be live and strengthen the dollar."

Spot gold may stabilize around support at $1,244 per ounce, and then rise into a range of $1,252-$1,258, according to Reuters technical analyst Wang Tao.


So, gold market right also stands under impact of new issue - possible rate hike in March. As price-in process just has started - market could show deeper retracement. On daily chart this will be an area around new MPP @ 1235:
gold_d_01_03_17.png


On 4-hour chart we see that plunge down is rather fast, K-support has been tested ones already, gold bounced up, but right now it challenges this level again. 1135 also will be Fib level and WPS1 area:
gold_4h_01_03_17.png


On hourly we have H&S pattern. CD leg is rather fast, and market already has completed AB=CD target. Still, due mentioned reason our next target is 1.618 extension that also will be around 1235 area. As you can see this level will be rather strong support. There we will see what will happen.

Right now gold drop is based on March rate hike expectation. If NFP data will not support this idea - situation could change rather fast:
gold_1h_01_03_17.png


So, right now we think that it is not good time for taking any long position, as we expect further drop to 1235 area.
 
Good morning,

(Reuters) - hat stoked expectations of a U.S. interest rate hike in March. Spot gold fell 0.2 percent to 1,246.14 per ounce by 0255GMT. On Monday, the metal rose to $1,263.80, its highest since Nov. 11.

U.S. gold futures fell 0.3 percent to $1,246.60. The dollar index , a measure of the greenback against a basket of six other major currencies, was up 0.1 percent at 101.910. On Wednesday, it reached 101.97, the highest since Jan. 11.

Higher U.S. interest rates would diminish demand for non-interest bearing gold while a higher dollar makes the yellow metal more expensive for buyers using other currencies.

"Much of the recent strength we are seeing in the dollar is more attributable to an abrupt about-face in terms of what the markets are expecting from the Federal Reserve’s March meeting," said INTL FCStone analyst Edward Meir. Despite the hawkish rate backdrop, gold has been performing impressively considering that the U.S. equity markets also surged to new highs, Meir added.

The Dow Jones Industrial Average blasted through the 21,000-point mark for the first time. Both the Dow and the S&P 500 rallied around 1.4 percent. U.S. consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years, another reason for the Fed to hike interest rates this month.

Fed Governor Lael Brained on Wednesday said that it may be "appropriate soon" to raise interest rates as the global economy seems to have turned a corner. More Fed policy-setters, including Chairwoman Janet Yellen
and Vice Chairman Stanley Fischer, will speak on Friday, likely providing further signals on the Fed's policy path ahead of the March 14-15 meeting.

Spot gold may retest a resistance at $1,252 per ounce, a break above which could lead to a gain to the next resistance at $1,258, according to Reuters technical analyst Wang Tao.

"If we look at gold’s performance over the course of the last five trading sessions, prices have hardly dropped at all, telling us that funds remain committed to the precious metal in light of what they view to be an uncertain U.S. legislative outlook," Meir said.

"In addition, funds do not want to get too short ahead of the critical French elections." Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.28 percent to 843.54 tonnes on Wednesday from 841.17 tonnes on Tuesday.


So, gold has completed our short-term target and re-test broken 1245 top, touched March MPP. Technical picture on daily suggests further upward action to 1280 target as normal market mechanics right now suggests no deep retracement:
gold_d_02_03_17.png


On 4-hour chart gold almost has hit WPS1 and 1235 FIb level. Now it is possible that another butterfly is ready to start here. Extension of current retracement coincides with 1280 target:
gold_4h_02_03_17.png

As you can see price shows fast upside recovery as soon as H&S targets have been met. Gold also has formed upside reversal swing. Thus, today we expect to get minor upside continuation to 1255 area that should finalize right wing of potential new butterfly pattern on 4-hour chart, as we see some common price action with the one that stands in circle and was not too much time ago:
gold_1h_02_03_17.png
 
Good morning,

(Reuters) - Gold edged down on Friday after falling more than one percent in the previous session, and was on track for its first weekly decline since late January on expectations of a U.S. rate hike in March.

Spot gold dropped 0.2 percent to $1,232.81 per ounce at 0309 GMT. The metal had its worst session since Dec. 15 on Thursday, when it fell 1.1 percent to touch a more than one-week low at $1,230.58. U.S. gold futures rose 0.2 percent to $1,234.90.

Increasing chances of a rate hike should keep a lid on any gold rallies leading into the March meeting, MKS PAMP Group trader Sam Laughlin said. "With (U.S. Federal Reserve) President Janet Yellen on the wires tonight, we look to see further weakness across the precious complex should she, as expected, promote the potential for an interest rate increase in March," Laughlin said. "Initial support for gold sits around $1,230, while below this we look to the 100 day moving average at $1,210."

Yellen and Fed Vice Chair Stanley Fischer are both due to speak later on Friday. The number of Americans filing for unemployment benefits fell to near a 44-year low last week, pointing to further tightening of the labor market even as economic growth appears to have remained moderate in the first quarter.

A surge in business and consumer confidence during President Donald Trump's first weeks in office has helped push the Fed toward its first sustained series of interest rate hikes in more than a decade, despite a dearth of firm policies from the administration.

Spot gold may temporarily hover above a support at $1,232 per ounce and then bounce towards a resistance at $1,241 before falling again, according to Reuters technical analyst Wang Tao.

A correction in gold, however, is likely to be shallow as investors remained friendly to bullion as a hedge against global uncertainty and rising inflation, analysts said. ABN Amro lifted its year-end 2017 gold price forecast by $200 to $1,300 on Thursday and said prices would likely consolidate until turning higher later in the year.

Commerzbank said any setbacks to prices should be limited and short-lived due to uncertainty over Trump's policies and European elections. The bank revised its first half 2017 gold price forecast upwards to $1,250 per ounce while confirming its year-end forecast at $1,300 per ounce.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.21 percent to 845.32 tonnes on Thursday from Wednesday.


So, miracle has not happened and gold feels the presure of price-in process of posible rate hike in March as other assets across the board. Thus, right now gold is breaking market mechanics of short-term bullish setup on daily chart. This scenario assumes no deep retracement in current moment and upside continuation to 1278, while gold shows opposite behavior. This scenario has not been broken totally yet, as price stands at the 1230 edge support to keep it valid.

At the same strength of drop on intraday charts makes us think that downward retracement will continue. Next level will be 1212 K-support around MPS1 and oversold:
gold_d_03_03_17.png


As gold has exceeded our short term retracement target - we have to increase the scale of retracement and now watch for AB-CD pattern with 1222 target. In fact, we could get H&S pattern that could bring price to 1210 or even 1180 Fib supports on daily chart.
But, this is not a tragedy as bullish sentiment will hold, even with retracement to 1180. Actually this retracement is expected and natural. We've talked about it since year has started and right now market gets valuable fundamental background to start it. Sooner or later it has to be started as right now gold stands in first upside recovery after 6 month strong bear trend. Some time it should be interrupted by deep retracement:
gold_4h_03_03_17.png
 
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