Sive Morten
Special Consultant to the FPA
- Messages
- 18,673
Fundamentals
(Reuters) - Gold hit a four-month high on Friday and was on track for a fifth straight weekly gain as the U.S. dollar fell against the euro on an agreement for a political coalition in Germany.
Palladium hit a record high in a continued rally fueled by tight supplies and increased demand in the automotive industry for autocatalysts in gasoline-burning vehicles.
Spot gold was up 1.2 percent at $1,338.39 an ounce by 2:19 p.m. EST (1919 GMT). The session high of $1,339.31 was its highest since September. Bullion is up 1.4 percent this week and set for its longest run of weekly gains since April. U.S. gold futures for February delivery settled up $12.40, or 0.9 percent, at $1,334.90 per ounce.
Gold prices extended their rally after U.S. President Donald Trump said he would waive nuclear sanctions against Iran for the last time to give Washington and its European allies a chance to fix the "terrible flaws" of the 2015 nuclear deal.
"This is a last chance",Trump said in a statement, which fed investor worries and boosted safe-haven demand for gold.
"Certainly, Trump making that announcement helped, and it's been a risk-on move today," said Dan Hussey, senior market strategist at RJO Futures in Chicago.
The dollar index fell against a basket of currencies to its lowest since Sept. 8. The euro jumped to a three-year high after party sources said German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) had agreed a blueprint for formal coalition negotiations.
"The agreement is one of the first movements in a long time that people say is EU-positive. Hence the strength in the euro and gold, as well," Hussey added. A stronger euro makes dollar-priced bullion cheaper for European investors.
The U.S. dollar saw some pressure from falling producer prices in the United States in December, as underlying U.S. consumer prices recorded their largest increase in 11 months.
Both U.S. data reports tempered inflation worries.
Global equity market rally continues into 2018
by Fathom Consulting
The global equity market rally has continued into the first trading week of 2018, with global equity indices reaching unprecedented levels.
We expect equities to remain well supported for most of this year, even though we see them as around 40% overvalued on the basis of fundamentals. All three main indices in the US — the NASDAQ, S&P 500 and the Dow Jones — managed to top record highs on the back of a strong ISM manufacturing survey last Wednesday. (The new orders index climbed to a 14-year high of 69.4.) Japan, a nation reliant on exports to the US, also saw a rally on the back of this, with the Nikkei 225 making significant gains, while strong economic data in the euro area also lifted sentiment. Supported by high oil prices, with commodity producers such as Shell and BP benefiting, the UK FTSE 100 extended its rally, with the index reaching over 7700 last Thursday and Friday.
COT Report
No doubts recent CFTC data shows clear bullish sentiment. Last three weeks as open interest as net speculative positions are rising. At the same time total position is far from saturation and there is a pretty much room till extreme levels.
Thus, sentiment analysis tells that situation is bullish on gold and there is no barriers for further upside action from sentiment outlook.
Technicals
Monthly
Situation on gold market is changing very fast. Only in the middle of December we've talked about weakness of gold market but in recent two weeks anything has turned from top to bottom.
Right now gold price action looks really impressive. COT report also points on bullish sentiment and existence of upside potential as well.
December has become a turning point for gold market. There are two important technical issues are accumulated in just one month. They are bullish grabber and reversal candle.
Grabber suggests now action above 1355 top of 2017 year. If you will take even brief look on the chart, you could imagine a lot of different extensions that could be formed with targets above 1355. They are large butterfly, AB-CD's of different scales.
December reversal feature also is very important and bring more confidence with upside continuation. As you can see December low stands under lows of four previous months but it has closed above the top of November.
Our major trend line (green) still stands valid. That's why long-term bull trend stands intact. December candle should provide us a lot of patterns for trading on lower time frames, in addition to large patterns that we could get here later.
Just grabber shows on upside perspective above 1355 and this is sufficient potential for trading on daily chart.
Finally, December and January (by far) show tail close that is also bullish supportive issue. Beyond 1355 next target mostly will be 1380-1391 that includes 2016 top, major Fib level and YPR1.
Weekly
Weekly chart shows flawless bullish picture - trend is bullish straight up action with tale closing. At the same time market is not at overbought right now and here it doesn't have any barriers to reach at least 1355 tops.
Overbought should appear around 1390 area.
Also gold has passed rather easily through our 1330 level - COP target was disrespected, MPR1 broken. May be some minor relief could happen, but mostly it will stand in relation to daily and lower time frames. Here, on weekly, it could pass insensibly.
Following grabber's idea, here we could focus on nearest target above 1355 tops. It is 1384 AB-CD objective point. And, in general 1380-1390 area will be very important. Market could stand there for a long time. This is major Fib level on monthly chart (1380), new YPR1 @ 1391, multiple targets and extensions around 1380-1390 area.
Thus, it is logical to expect some brief taking around 1380-1390 area and use this area as indicator. Because if market will break it up then - this will be very important signal.
Daily
Here, as on other markets, price has jumped due impact of external fundamental factors. Many of them just coincided in one moment. As a result, Gold has shown just minor reaction on our intraday 3-Drive "Sell" pattern and daily targets cluster around 1330. It was enough to move stops to break even but definitely this was not an action that we've counted on.
Our thrust is still valid, but unfortunately we didn't get as B&B as DRPO here. Nothing. By Friday's breakout market has jumped above our COP target and MPR1 area. What other targets we could get before 1355 top?
Well, the only target that we have here is based on butterfly pattern that has triggered upside reversal. This is ultimate 1.618 extension of whole butterfly swing. Target stands at 1350 area, which also will be daily overbought.
Although weekly chart shows no real barriers till 13890 area, but here odds suggest that keeping longs above 1350 could be nervous as volatility could rise significantly. From the one hands - strong bullish sentiment will push price higher, but from another - overbought around previous top could become a reason for W&R of 1355 tops and moderate retracement. Thus, in longer perspective we could count on 1390, but on coming week it is better be prepared for exit around tops, especially if W&R will be formed.
Intraday
On intraday charts we do not have patterns in place and just few tools for analysis. Thus, on 4-hour chart mostly we have trend line, and while it will be valid upside action should continue. While price still has not completed our 1350-1355 target - it is possible to keep an eye on bullish continuation patterns on intraday charts. Most probable it should be "222" Buy.
WPR1 will stands at the same 1350 level.
On hourly chart last 2 sessions market was forming a kind of rectangle that was re-tested after breakout. Drop to re-test has happened precisely from our 1330 level, when target been hit.
Classic upside target by rectangle also points on the same 1350 area:
Conclusion
Long term situation has turned from top to bottom and brings some upside targets that we've identified on monthly and weekly charts.
On coming week, it is clear resistance around 1350-1355 area that could stop upside action for some time. While this area is not hit, we could keep an eye on possible intraday bullish continuation patterns.
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.
(Reuters) - Gold hit a four-month high on Friday and was on track for a fifth straight weekly gain as the U.S. dollar fell against the euro on an agreement for a political coalition in Germany.
Palladium hit a record high in a continued rally fueled by tight supplies and increased demand in the automotive industry for autocatalysts in gasoline-burning vehicles.
Spot gold was up 1.2 percent at $1,338.39 an ounce by 2:19 p.m. EST (1919 GMT). The session high of $1,339.31 was its highest since September. Bullion is up 1.4 percent this week and set for its longest run of weekly gains since April. U.S. gold futures for February delivery settled up $12.40, or 0.9 percent, at $1,334.90 per ounce.
Gold prices extended their rally after U.S. President Donald Trump said he would waive nuclear sanctions against Iran for the last time to give Washington and its European allies a chance to fix the "terrible flaws" of the 2015 nuclear deal.
"This is a last chance",Trump said in a statement, which fed investor worries and boosted safe-haven demand for gold.
"Certainly, Trump making that announcement helped, and it's been a risk-on move today," said Dan Hussey, senior market strategist at RJO Futures in Chicago.
The dollar index fell against a basket of currencies to its lowest since Sept. 8. The euro jumped to a three-year high after party sources said German Chancellor Angela Merkel's conservatives and the Social Democrats (SPD) had agreed a blueprint for formal coalition negotiations.
"The agreement is one of the first movements in a long time that people say is EU-positive. Hence the strength in the euro and gold, as well," Hussey added. A stronger euro makes dollar-priced bullion cheaper for European investors.
The U.S. dollar saw some pressure from falling producer prices in the United States in December, as underlying U.S. consumer prices recorded their largest increase in 11 months.
Both U.S. data reports tempered inflation worries.
Global equity market rally continues into 2018
by Fathom Consulting
The global equity market rally has continued into the first trading week of 2018, with global equity indices reaching unprecedented levels.
We expect equities to remain well supported for most of this year, even though we see them as around 40% overvalued on the basis of fundamentals. All three main indices in the US — the NASDAQ, S&P 500 and the Dow Jones — managed to top record highs on the back of a strong ISM manufacturing survey last Wednesday. (The new orders index climbed to a 14-year high of 69.4.) Japan, a nation reliant on exports to the US, also saw a rally on the back of this, with the Nikkei 225 making significant gains, while strong economic data in the euro area also lifted sentiment. Supported by high oil prices, with commodity producers such as Shell and BP benefiting, the UK FTSE 100 extended its rally, with the index reaching over 7700 last Thursday and Friday.
COT Report
No doubts recent CFTC data shows clear bullish sentiment. Last three weeks as open interest as net speculative positions are rising. At the same time total position is far from saturation and there is a pretty much room till extreme levels.
Thus, sentiment analysis tells that situation is bullish on gold and there is no barriers for further upside action from sentiment outlook.
Technicals
Monthly
Situation on gold market is changing very fast. Only in the middle of December we've talked about weakness of gold market but in recent two weeks anything has turned from top to bottom.
Right now gold price action looks really impressive. COT report also points on bullish sentiment and existence of upside potential as well.
December has become a turning point for gold market. There are two important technical issues are accumulated in just one month. They are bullish grabber and reversal candle.
Grabber suggests now action above 1355 top of 2017 year. If you will take even brief look on the chart, you could imagine a lot of different extensions that could be formed with targets above 1355. They are large butterfly, AB-CD's of different scales.
December reversal feature also is very important and bring more confidence with upside continuation. As you can see December low stands under lows of four previous months but it has closed above the top of November.
Our major trend line (green) still stands valid. That's why long-term bull trend stands intact. December candle should provide us a lot of patterns for trading on lower time frames, in addition to large patterns that we could get here later.
Just grabber shows on upside perspective above 1355 and this is sufficient potential for trading on daily chart.
Finally, December and January (by far) show tail close that is also bullish supportive issue. Beyond 1355 next target mostly will be 1380-1391 that includes 2016 top, major Fib level and YPR1.
Weekly
Weekly chart shows flawless bullish picture - trend is bullish straight up action with tale closing. At the same time market is not at overbought right now and here it doesn't have any barriers to reach at least 1355 tops.
Overbought should appear around 1390 area.
Also gold has passed rather easily through our 1330 level - COP target was disrespected, MPR1 broken. May be some minor relief could happen, but mostly it will stand in relation to daily and lower time frames. Here, on weekly, it could pass insensibly.
Following grabber's idea, here we could focus on nearest target above 1355 tops. It is 1384 AB-CD objective point. And, in general 1380-1390 area will be very important. Market could stand there for a long time. This is major Fib level on monthly chart (1380), new YPR1 @ 1391, multiple targets and extensions around 1380-1390 area.
Thus, it is logical to expect some brief taking around 1380-1390 area and use this area as indicator. Because if market will break it up then - this will be very important signal.
Daily
Here, as on other markets, price has jumped due impact of external fundamental factors. Many of them just coincided in one moment. As a result, Gold has shown just minor reaction on our intraday 3-Drive "Sell" pattern and daily targets cluster around 1330. It was enough to move stops to break even but definitely this was not an action that we've counted on.
Our thrust is still valid, but unfortunately we didn't get as B&B as DRPO here. Nothing. By Friday's breakout market has jumped above our COP target and MPR1 area. What other targets we could get before 1355 top?
Well, the only target that we have here is based on butterfly pattern that has triggered upside reversal. This is ultimate 1.618 extension of whole butterfly swing. Target stands at 1350 area, which also will be daily overbought.
Although weekly chart shows no real barriers till 13890 area, but here odds suggest that keeping longs above 1350 could be nervous as volatility could rise significantly. From the one hands - strong bullish sentiment will push price higher, but from another - overbought around previous top could become a reason for W&R of 1355 tops and moderate retracement. Thus, in longer perspective we could count on 1390, but on coming week it is better be prepared for exit around tops, especially if W&R will be formed.
Intraday
On intraday charts we do not have patterns in place and just few tools for analysis. Thus, on 4-hour chart mostly we have trend line, and while it will be valid upside action should continue. While price still has not completed our 1350-1355 target - it is possible to keep an eye on bullish continuation patterns on intraday charts. Most probable it should be "222" Buy.
WPR1 will stands at the same 1350 level.
On hourly chart last 2 sessions market was forming a kind of rectangle that was re-tested after breakout. Drop to re-test has happened precisely from our 1330 level, when target been hit.
Classic upside target by rectangle also points on the same 1350 area:
Conclusion
Long term situation has turned from top to bottom and brings some upside targets that we've identified on monthly and weekly charts.
On coming week, it is clear resistance around 1350-1355 area that could stop upside action for some time. While this area is not hit, we could keep an eye on possible intraday bullish continuation patterns.
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.
