GOLD PRO WEEKLY, July 25-29, 2016

[Sive Morten]

Fundamentals

(Reuters) Gold held steady on Friday, after rising over one percent in the previous session, as equities fell on weak corporate results and the dollar eased but the metal remained on course for a second straight weekly decline.

* Spot gold edged up 0.1 percent at $1,332.56 an ounce at 0051 GMT. Bullion rose 1.2 percent on Thursday, but was down about 0.4 percent for the week

* U.S. gold was up 0.1 percent at $1,332.80 an ounce.

* Asian stocks dipped early on Friday after weak corporate results halted Wall Street's record run overnight, while the yen held to large gains made after the Bank of Japan's governor downplayed the need for "helicopter money" monetary policies.

* The ECB held rates at record lows as it seeks to revive growth and inflation with cheap credit to the economy. It left the door open to more policy stimulus, highlighting "great" uncertainty and abundant risks to the economic outlook.

* According to a BBC interview, recorded mid-June but broadcast on Thursday, BOJ Governor Haruhiko Kuroda ruled out the idea of using "helicopter money" - or directly underwriting the budget deficit - to combat deflation.

* The U.S. Federal Reserve will wait until the fourth quarter before raising interest rates, likely in December after the presidential election, according to a Reuters poll which once again showed subdued inflation expectations.

* U.S. home resales hit their highest in nearly 9-1/2 years in June as low interest rates lured first-time buyers into the market and the number of Americans filing for unemployment benefits fell last week, underscoring the economy's strength.

* Confidence in prospects for the global economy has been dented following Britain's vote to leave the European Union, with a growing view that monetary policy is a fading force and many governments now need to borrow and spend, Reuters polls showed.

Technicals
Monthly

July currently has very limited impact on overall picture. Right now it slowly takes the shape of "shooting star" pattern. Although it doesn't prove that retracement could be as far as 1180 area, but at the same time it gives a hint that downward action could continue in August as well. Still candle has not closed yet and situation still could change.

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...

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 1-2 weeks:

Weekly

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.

Here guys, again, we have only some hints. 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.

There are two important things here. First one forbids us to go long - weekly overbought and reaching of 1.618 extension of recent retracement down. Second - again, the same 1.618 ratio and hint on H&S, but now on direct one, bearish reversal pattern.

Weekly chart also shows that the bottom of downward retracement will be around 1160-1170 as here we have major 5/8 Fib support. And also we could get some opinion on the shape of retracement. H&S usually suggests some AB=CD down, based on the head and on right shoulder.

So, everything that we've said last week is valid today as well. Now our former analsys is adjusted by bearish engulfing pattern right at the top of our construction here. Taking all this stuff together, we probably could start searching chances to go short. Usually after engulfing pattern has been formed, price shows minor return back inside its body. Thus, this could give us oportunity to take short position. Bearish divergence right at monthly resistance also brings more confidence with this setup:

Daily
Following the same logic and setup that we've created on weekly chart, here we could suggest how in particular gold could show this "upside" shy return.
Daily trend is bearish, but market has reached 50% Fib support and created bullish engulfing pattern. Usually it has target that equals to the length of its bars. At the same time we here have recognizable shape of H&S pattern that still awaits of appearing of right shoulder around 1350-1360 area. This corresponds to what we've said on weekly chart. Thus, daily bullish candlestick pattern could put a foundation for upward action:

4-hour
Here we have very useful picture. Recall our bearish dynamic pressure that we've traded last week. Here is an explanation why it has worked at all. Take a look that gold had 1.618 uncompleted target slightly below and dynamic pressure was a preparation to hit it. As soon as target has been hit - gold immediately has turned up.
Right under the neckline of our H&S pattern stands very strong support, that includes K-area and MPP. Currently it is not very important for us, but it could be imortant later.
Now we also have bullish divergence with MACD that also hints on possible upside action. Watch for bullish grabbers on Monday. If we will get any - this will be very important and almost guarantee starting of upside action to the top of right shoulder:

Hourly

Here is the pattern that we will use to monitor upward action. Scalp traders could use it for long entry as well. This is reverse H&S pattern. Right now gold stands at most "responsible" moment - bottom of right shoulder. Here is the moment where clarity should come, whether H&S pattern will work or fail.
As you can see gold has formed minor bearish grabber that suggests new low before upside reversal. Probably price will reach major 5/8 Fib support level. As you can see all picture right from monthly chart through hourly one looks very harmonic and shows single setup. Now you easily could combine the whole process up from hourly chart to monthly one:
hourly reverse H&S should lead us to 1360 area - top of 4-hour H&S pattern. By this action daily engulfing will be completed as well. This upward action is minor move up inside weekly bearish engulfing. As soon as it will be completed major downward action should start. On this way down 4-hour H&S probably will be completed and we will shift to weekly larger H&S pattern. This pattern, in turn, will lead us to the bottom of right shoulder of monthly reverse H&S and this will be major point to take positions with long-term bullish trend around 1160-1180 area... Looks really nice.

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 shows amazingly harmonic structure of different pattern. Next week we will work with upside action to 1360 area.

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 was little changed on Tuesday, after falling in the past two sessions, as the dollar slipped and equities eased ahead of the U.S. Federal Reserve meeting later in the day. Asian markets remained cautious with investors waiting for cues from the two-day Fed meet, sending the safe-haven yen higher.
The dollar edged down 0.3 percent versus a basket of six major currencies, below the previous session's high of 97.569, its loftiest since March. Spot gold was up 0.1 percent $1,316.80 an ounce at 0655 GMT, hovering above the previous session's close of $1,315.15.

U.S. gold dipped 0.2 percent to $1,317 an ounce. "At this moment people ... are more conservative on the
likelihood of an interest rate hike as well as further stimulus. That would induce further correction in gold prices," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. The U.S. central bank is widely expected to stand pat on policy but investors were bracing for any possible signals from the Fed about a tightening later this year. 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 the precious metal is priced. "We are quite nervous about the precious group here, as barring a sharper sell-off in U.S. equities, we suspect that the
pressure on gold will only intensify between now and Wednesday," said INTL FCStone analyst Edward Meir in a note.
"We suspect the (Fed) statement alone will not be enough to change perceptions about a stronger dollar or dent expectations about rising rates." U.S. federal funds futures fell to four-week lows on Monday, signalling traders raised their bets the Fed would raise short-term interest rates by the end of 2016 if the economy
shows further improvement. Spot gold may retest a support at $1,313, a break below which could cause a loss to the next support at $1,298, Reuters technical analyst Wang Tao said. Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 958.69 tonnes on Monday.

On gold market recent activity was not very strong. Most interesting information stands on hourly chart. On daily overall picture barely has changed. Gold still stands around 50% Fib support. Bullish engulfing pattern that has been formed last week is still valid, although retracement back in its body was a bit greater than usual:

On 4-hour chart we also do not see downward breakout of our strong support. Market still stands above neckline and has chances on upside bounce:

Although today Fed meeting starts, and we mostly expect some positve look on USD, which means not good consequences for gold market. But currently market still keeps chances on upside action.
On weekend, based on hourly chart analysis we've said that market probably will drop lower before reversal will happen, but current drop is even greater than we thought. Here, we probably can't treat situation as H&S any more, but Butterfly "Sell" is still possible. And it will be valid until market stands above recent lows.
If gold will drop below it - it will not cancel yet idea of 4-hour chart H&S, and could just change neckline, but we will need to watch for some other reversal patterns on hourly chart...So let's keep watching.

Just to remind you - for us, guys, most important thing is good short oportunity, we have no intention to trade gold on long side by far. That's why we do not care much how particularly gold will climb to 1350 area, we just will be happy when it will be there.
Also, if even gold will drop below 1300 and H&S will not be formed - this is not a tragedy as well. It just means that gold faster will reach our strategical point for long entry around 1160-1180. Just read our weekly research and you will get it better.

Finally, if Fed comments will be supportive (as we think as well), then hourly chart could form different Butterfly:

And this will be even better, since it will lead gold to strong K-support on 4-hour chart. BEsides our H&S pattern will not be erased - we just will adjust neckline.
I just want to say, that if you have intention to trade gold long - wait results of Fed meeting. As we will get clear pattern it will be simplier to get direction for trading and risk will be less.

 

[Sive Morten]

Good morning,

(Reuters) Gold edged slightly lower on Wednesday as the dollar and equities firmed ahead of the U.S.
Federal Reserve's policy decision due later in the day when it is expected to keep interest rates unchanged.
The Fed is likely to defer any possible increase until September or December, as policymakers hold out for more evidence of a pickup in inflation. Asian stocks settled near one-year highs on Wednesday while
the safe-haven yen slumped after Japan's government announced a larger-than-expected economic stimulus package, which led most of the region's bourses higher. The dollar was up 1 percent against the yen, after
falling 1.1 percent in the previous session, on expectations of significant monetary stimulus by the Bank of Japan later in the week.

Spot gold slipped 0.1 percent to $1,317.96 an ounce at 0641 GMT. Bullion rose 0.4 percent on Tuesday.
U.S. gold fell 0.2 percent to $1,317.90 an ounce. "Prices are going to remain on the sidelines leading into
the meeting. Certainly, the pricing on the probability of a hike is probably low," said ANZ analyst Daniel Hynes.
"Investors are mindful of the macro environment, which is broadly positive. For the moment, it is a wait and see environment."

U.S. consumer confidence held steady in July and new single-family home sales hit their highest level in nearly 8-1/2 years in June, suggesting sustained momentum in the economy that could allow the Federal Reserve to raise interest rates this year. "We suspect that the Fed statement out on Wednesday will be
benign enough to leave the current "higher rates" scenario pretty much in place," INTL FCStone analyst Edward Meir said in a note. "And with other central banks backing away from further additional easing measures - at least for now - gold could find itself on the defensive for the balance of the week." 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 the precious metal is priced.

Spot gold is biased to break a support at $1,313 per ounce and fall towards the next support at $1,298, as its
consolidation above $1,313 is ending, according to Reuters technical analyst Wang Tao. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 954.24 tonnes on Tuesday.

So, market mostly stands silent across the board in expectation of Fed speech, and gold is not an exception.
On daily chart we see nothing new at all. Minor inside sessions:

On 4-hour chart we still suspect that some minor dive before upward reversal could happen, or even not minor but strong downward breakout. It will depend on what Fed will say. Anyway, if you are planning to go long here - the best chance for that is to take position after Fed, on strong K-support area and when butterfly will be completed. This will be safer and cheaper...
Overal action here reminds extended bearish dynamic presure. We've traded the first part of it but it was not over there and is lasting right now. Besides, if we would suggest that neckline already has been touched - current action looks bearish as market is not forming right shoulder. This leads us to conclusion that neckline should adjusted lower, right to K-support area and it has not been touched yet:

On hourly chart we continue to monitor this butterfly. It could change the shape a bit due speculators tricks at the eve of the Fed speech, but target will remain the same:

 

[Sive Morten]

Good morning,

(Reuters) Gold edged up on Thursday, clinging to gains from the previous session when it rose 1.5
percent to a two-week high, on a weaker dollar after the U.S. Federal Reserve left interest rates unchanged.
The Federal Reserve said near-term risks to the U.S. economic outlook had diminished, potentially leading to a resumption of monetary policy tightening this year. However, the Fed gave no indication whether it would raise rates at its next meeting in September.

Spot gold inched up 0.2 percent to $1,341.60 an ounce at 0715 GMT. Bullion on Wednesday touched a high of $1,342.18, its best since July 14. U.S. gold rose 1.1 percent to $1,341.40 an ounce.Gold prices may surpass the more-than-two-year high hit earlier this month and might test $1,400 levels, said V Hareesh,
Research Head, Geojit BNP Paribas.

"Gold will come down only after Fed raises the rates. Otherwise, prices will continue to rise," he added. Gold is sensitive to rising U.S. rates, which would lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. "Moving forward, we don't see much changes in sentiment of what the Fed will do. They are unlikely to raise rates in September with the U.S. Presidential elections due later this year," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.

Spot gold may end its current bounce around a resistance at $1,346 per ounce, as suggested by its wave pattern and a Fibonacci retracement analysis, Reuters technical analyst Wang Tao said.

The dollar index, which tracks the greenback against a basket of six major rivals, fell 0.4 percent to 96.637.
Earlier this week, it had risen as high as 97.569, its highest level since March. In the wider markets, Asian stocks edged up on Thursday after the Fed provided an positive assessment of the U.S. economy and lifted risk sentiment. Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares have seen an outflow of nearly 28 tonnes in the last three weeks.

So, on gold Fed has suppoted our idea on H&S pattern. As comments were treat as insufficiently hawkish by investors, USD has dropped across the board and Gold has turned up finally. Although this action and H&S has no primary importancy for us, but, appearing of another pattern that we could trade is nice issue:

On 4-hour chart we finally could draw neckline, market starts to show upside action:

Currently is major tast to estimate the final destination of this upward action. Here, on hourly chart we have some multiple patterns. First one is 1.618 AB-CD that creates Agreement with 1350 Fib resistance and this is most reliable setup. Also we could get here butterfly "Sell", with 1347 target. Thus, 1347-1350 is an area where we will be watching for bearish patterns and downward reversal:

 

[Sive Morten]

Good morning,

(Reuters) Gold remained steady on Friday and was on track for a monthly gain of 1 percent, as the dollar extended its losses after the Bank of Japan's stimulus fell short of market expectations. The Bank of Japan expanded monetary stimulus on Friday through a modest increase in purchases of exchange-traded funds,
yielding to pressure from the government and financial markets for bolder action to spur growth and accelerate inflation towards its 2 percent target.

By coordinating its action with the government's big fiscal spending package, the BOJ likely aimed to maximise the effect of its measures on the world's third-biggest economy, which is struggling to escape decades of deflation. The dollar last traded at 103.28 yen, down 1.8 percent. The dollar index, which measures the greenback against a basket of currencies, was down 0.4 percent at 96.363.

Spot gold eased by 0.1 percent at $1,333.33 an ounce at 0740 GMT, on track for its second straight session of monthly gains, and was headed for its first weekly gain in three. U.S. gold too remained unchanged at $1,331.90 an ounce. "Maybe at this moment, the BOJ's decision is a bit supportive for gold," said Dominic Schnider of UBS Wealth Management in Hong Kong. "If you ask me which is still the better safe-haven story... It is gold and not yen. At one stage, the BOJ need to do more in order to keep the economy going. That will make yen negative." Spot gold looks neutral in a range of $1,333.99-$1,346 per ounce, and an escape will point a direction, according to Reuters technical analyst Wang Tao.

Gold market also takes relief after hard week. Now we see minor retracement back after Fed's rally. So, on daily chart nothing curious is happening, thus, we continue to wait for H&S completion:

On 4-hour chart also nothing really new. I have checked last candle but unfortunately we haven't got bullish grabber. It could become very good sign for upward continuation, but no...

Most important for us is hourly chart. Right now price stands at K-support and Agreement. And normally, if market indeed is bullish and has intention to move higher - it should hold here. This is enough retracement on a way up. Thus, let's keep watching what will happen around. Let's hope that we will get gold around 1350 area on next week: