GOLD PRO WEEKLY, March 07-11, 2016

[Sive Morten]

Fundamentals

(Reuters) - Gold prices were flat on Friday, late in a seesaw session that took prices to a 13-month high twice on technical and underlying investment demand, with a sharp drop in between due to forecast-beating U.S. payrolls data.

In early trade, spot gold hit its highest in 13 months, and did so again later at $1,279.60 an ounce. The precious metal has been driven up 19 percent this year by economic concerns, which sparked volatility in equities and oil prices and boosted gold's appeal as a safe haven.

"It started out with strong gains overnight, based on continued dollar weakness, but as we got closer to the jobs release, the market cautiously pared back," said James Steel, chief metals analyst for HSBC Securities in New York.

"That selling was absorbed very readily. Technically we turned out of the bear market last night."

Prices pared gains after Dallas Federal Reserve Bank President Robert Kaplan said he expects solid growth in the U.S. economy this year and does not expect the economy to fall into recession.

U.S. Labor Department data that employment gains surged in February, the clearest sign yet of job market strength that could further ease fears the economy was heading into recession and add to the argument for the Fed raising interest rates.

"The data was all about the future Fed move and the data released has confirmed that the Fed are not off beat with their strategy," Ava Trade's chief market analyst Naeem Aslam said.

"Now the main focus will be toward the Fed's upcoming meeting in a few weeks' time, and how they are going to play with the growth revision forecast."

Investment interest has been driven by concerns over the global economy.

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares , rose nearly 5 tonnes on Thursday, data from the fund showed.

BlackRock Inc said it had suspended the issuing of shares in its physically backed gold exchange traded product due to a historic surge in buying.

CFTC data again shows bullish parade. Open interest and net long position grow on a price up. SDPR statistics also looks very impressive.

So, as you know NFP data was mixed. Yes, numbers were nice - 240 K instead of 190K expected, but wages have decreased for 3 cents and this is negative moment that hits on inflation expectation. That's why after initial bearish reaction on gold - new rally leg has followed.

Also guys, recently I've read some articles on Globe gold balance and have found interesting information. In long term perspective (5+ years) Global Financial system could change dramatically. Russia and China buy gold with huge tempo and probably will continue to do this. Canada instead is first country of G20 that has no gold in storage.
You probably have heard something of European gold repatriation from US. Overall program suggests returning of Germany and Netherlands gold back to Europe. Last year Germany was able to return somewhere around 200-300 tonnes (10%), 2016 should come more. The same is Netherlands. Other EU countries could follow this tendency.
So, why I'm talking about it. This is drastic precedent, guys. Previously EU has no independent foreign policy, US just tell what to do, and EU followed. Of course US wouldn't return any gold if they could do this. I suggest that they had have to do it. This probably some kind of payment for EU loyalty in US foreign affairs. It is definitely that EU confrontation with Russia stands in favor of US mostly. Thus, I suspect that EU has agreed to support US, but demand gold repatriation. This costs really expensive for US.
But this cracks overall global domination of US in Europe. As soon as EU will give gold reserves back - they will take more independence. Second, this issue indicates that US can't just rule EU without any consequences or payment. This is very important.
Now, I'm asking as US have to return back 3-4 K tonnes of gold within 2-4 years - where they will take it? Russia and China grabs almost everything on open markets. Nobody knows whether EU gold stands in reserves or may be it was utilized many years ago or put in some lending turnover with Asian countries, spent on USD support etc...Nobody knows. But there is no smoke without fire, right? Many analysts tell that this gold exists only in account sheet. Physically it was consumed. So, to return it - they will have to buy it...
So, it is really interesting times ahead guys....Many analysts suggest that BRICS cooperation on excluding USD in mutual trading and trying to back national currencies by gold (although in very small amount) by China and Russia are challenge to destroy World lobby on transnational corporations that would like to exclude physical money totally and use only electronic ones to get total control on global financial system and population.

Technicals
Monthly

So since New Year gold stands in upside action. Reasons could be different - geopolitics, investors' assets distribution in the beginning of the year. Upside action currently has not changed situation drastically yet on but we will monitor how situation will change.

We still think that currently gold should be mostly driven by geopolitics, rather than economics. This driving factor creates absolutely new scale of uncertainty and leads to very fast changes on Globe political situation. That's why we suspect that gold market hardly will fall dramatically, since we're just in the beginning of Middle East tensions. The fact that gold was dropping recently on a background of Middle East turmoil looks a bit artificial and this situation already is changing. Thus, recently gold has risen even on strong NFP data, compares to other assets. Recent reaction on GDP revision also was as strong as it could be or as it was some time ago. Demand on safe haven assets starts to increase - just take a look at JPY, CHF and gold, SDPR and other gold funds stats.

Not just Middle East stands in our focus. We see that fumes of this conflict spread over planet. Recall Paris terrorist attack, refugees tensions in EU, Brexit voting, a lot of contradiction inside EU as political as economical - North Stream-2, mutual sanctions, Ukraine membership voting in Netherlands, Montenegro NATO membership and a lot of others. China's financial turmoils is isolated theme for discussion. All these stuff is happening on a background of reducing population wealth and solvency. So, we see that entropy is growing. Currently we could just gamble what game stands under curtain of political meetings among major leaders.

As market gradually starts to come to the same conclusion as gradually situation on gold market starts to change in positive area. International banks purchase gold in big volumes, mostly PBoC and Russian Central Bank.

Speaking on breakeven points between bullish and bearish sentiment - market should show significant upside action and form bullish reversal swing to destroy current bearish domination. It means that gold has to exceed 1380 area.

At the same time gold needs to move above 1380 to break current bearish trend by forming upside reversal swing.

So, on long-term charts it could happen, that we will not see clear tendency and gold could turn to some wide range action. Because right now it is too many sources that could initiate impact on gold market. They will push market in one and other sides. Geopolitical situation in the World has reached very high degree of uncertainty and we believe that sooner rather than later it will become a dominating factor for gold market and already it's becoming.

Anyway, gold's shift from downward action to flat one, even it will be wide - already will be significant moment.
Monthly chart trend has turned bullish.

As you can see upside action has started right after butterfly "Buy" has been completed. Currently market has reached 5/8 resistance of butterfly 's swing. Gold has exceeded Yearly Pivot and this tells on existing bullish trend on monthly chart. As gold is not at overbought here - next logical destination is 1314 area of Yearly PR1.

Weekly
So within past week we have appealed to weekly levels many times, finally major resistance has been hit. We not occasionally have said that the ceil for last week is 1280 area - Fib level and overbought on weekly chart. Thus, even on recent rally market was not able to exceed it.

Still, chart shows that gold has not quite reached level for 5$. Right above the level MPR1 stands. Thus, we think that market could show minor upward action but it will be really limited by 1295 area, where gold finally will meet resistance.

If this will happen - we will get weekly bearish "Stretch" pattern. Thus, anyway we should start preparation to some retracement down probably. Within 2 weeks we will get Fed meeting and it could become a cornerstone of this retracement, especially if Fed position will be hawkish or if they will rise rate. March is last month of 1st Quarter, thus, initial plan has suggested 0.25% rate hike in each quarter - so let's see will it happen or not.

Daily

Now we're turning back to the idea of possible retracement. Weekly chart shows strong resistance area around 1290. Daily chart forms potentially reversal pattern - butterfly "Sell". Currently it is difficult to say, guys, on 1.618 butterfly target. In fact, it could be reached, weekly and daily overbought allow to do this, but I'm not sure that market definitely will reach it.

Another interesting issue - DRPO "Sell" Yes, guys, we return back to it, since shape has changed and it has become interesting again. Take a look - right now we clearly see two tops. On 2nd top gold has created new high and this is advantage of DRPO . So, this is another pattern that we will keep an eye on on next week.

1180 area is still interesting as retracement target - since this is 50% support and previous consolidation that could be re-tested. Now it seems a bit too deep from current level, but in reality this is average retracement. This is also DRPO "Sell" potential target. But right now we can't say that retracement definitely will start. Let's wait at least until DPRO confirmation.

4-hour
Now why we still think that gold could climb slightly higher before real reversal will happen. ON 4-hour chart market has completed AB-CD and another butterfly pattern. And take a look - has formed perfect huge evening star pattern right at the top:

It means that on Monday market could show retracement down, but it will be intermediate retracement, not final one. Other words speaking - gold will show minor bearish reaction just to respect these pattern, which will lead market to 1245 K-support and let it to test WPP. After that another leg up could still happen, although we do not sure yet... Here is why.▼

Hourly
On hourly chart there is only one pattern that is really interesting for us. This is upside AB-CD. Take a look how market has respected as 0.618 as 1.0 targets. But it slightly has not reached 1.618. Also, on daily chart we see that gold has not quite completed daily big butterfly as well. Somehow this makes me think that after moderate reaction on 4-hour chart and retracement to 1245 area - we could get upside continuation to 1285 or even slightly higher and only after that real retracement down on daily:

So, as you can see there are too many small details right now, although on daily it looks not as complex as here.

Conclusion:
We think that fundamentally gold stands somewhere near bottom and situation is starting to change. But this bottom could be "extended", because the scale of this analysis is long-term. It means that market could drop lower, say to 1000$ , but pace of drop will be significantly slower, or will turn to some wide range fluctuations.

In short-term perspective gold has reached important barrier and completed important targets. Logically it could turn to meaningful retracement on daily chart and take some pause before Fed meeting.

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.

 

[bobsbeer]

Some interesting insights. Thanks.

 

[dkami]

Sive your analysis is second to none and you have done this year after year, truly inspirational!

Thanks as always!

 

[ochills]

Thanks Commander,
Gold look very attractive for a long term bullish trend, I think wave 5 has been completed, though 5th wave does not hit the expected target 1025.70. Corrective wave "A". is in progress so as to form a complete wave circle.

 

[Sive Morten]

Good morning,

(Reuters) - Gold advanced to trade near a 13-month high on Tuesday, supported by a struggling dollar and hopes the U.S. Federal Reserve will not raise interest rates as soon as next week's meeting.

The non-interest yielding metal could test $1,300 an ounce, more than 2 percent higher than its current level, if the Fed stands pat at the March 15-16 policy meeting, said Daniel Ang, analyst at Phillip Futures in Singapore.

"A lot of traders are trying to anticipate a 'no rate hike' scenario, causing a bit of an increase in gold," said Ang. A shaky global economy and the recent strength in the U.S. dollar, which had curbed U.S. exports, could convince the Fed to hold rates steady, he added.

Spot gold was up 0.2 percent at $1,269.46 an ounce by 0644 GMT, not far from Friday's peak of $1,279.60, its highest since Feb. 3, 2015.

U.S. gold for April delivery gained 0.5 percent to $1,270.50 an ounce.

The dollar has been struggling to find traction despite a robust U.S. February employment report on Friday, its losses extending this week as a rally in oil prices rekindled demand for the euro and commodity-sensitive currencies.

That has benefited gold along with fairly low market expectations that the Fed will raise interest rates again next week after lifting them for the first time in nearly a decade in December.

Ahead of the meeting, Fed Governor Lael Brainard, who has emerged as a leader of the Fed's dovish faction, argued for

"patience" in raising interest rates. But Fed Vice Chair Stanley Fischer warned that inflation is showing signs of accelerating, words that policymakers often use when signalling a preference for raising rates.

Supporting bullion, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, dropped slightly on Friday, but stayed near the highest since September 2014 at 25.5 million ounces.

Goldman Sachs is sticking to a near-term target of $1,100 for gold, saying the rally "was driven by a lack of conviction in divergence in U.S. growth as a weak U.S. dollar has been highly correlated with a higher gold price."

"We believe this realignment view of weak global growth is not supported by the U.S. data, which will likely reinforce higher U.S. yields, a stronger U.S. dollar and the return of divergence...," Goldman said in a report on Tuesday.

Well, guys, gold shows action that we've discussed in weekly research. Since major targets have not been completed for few bucks - gold probably will touch 1285 first and turn to retracement second.
Now we see that something of that sort is happening on daily chart:

On 4-hour chart we see some signs of bullish dynamic pressure, despite on cool evening star pattern:

Finally, on hourly chart theoretically market has chances to show AB-CD action based on evening star and get "222" Sell pattern, but my opinion guys, that upside butterfly has more chances to happen by 2 reasons.
First is uncompleted patterns on daily chart and higher time frame patterns overrule lower time frames ones.
Second - upside action is too long compares to evening star. We could accept AB leg and then drop down, but right now this extended AB=CD retracement is not quite logical in relation to strong drop on NFP release and evening star pattern. This makes me think that we still should see 1285 action first and only after that some retracement:

 

[Sive Morten]

Good morning,

(Reuters) - Gold edged lower on Wednesday, slipping with the euro as expectations that the European Central Bank is almost certain to ease policy this week weighed on the single currency.

Investors are also taking profits in the precious metal after its recent rapid rise, which saw it hit a 13-month high last week. But Mark To, head of research at Wing Fung Financial Group, said it may be a brief setback.

"Some correction is in place after the surge in gold prices in the past few weeks, but support could be strong at $1,230," said To.

"I'm optimistic over the medium term because I don't think the Fed is going to raise interest rates very soon despite the recent good economic data," he said, citing policy easing moves by other central banks.

Bullion could move towards $1,300 "or even $1,400" by the second quarter, said To, who only sees one U.S. rate hike in 2016, possibly later in the year.

U.S. gold for April delivery eased 0.5 percent to $1,256.70 an ounce.

Investors expect the European Central Bank to cut its deposit rate by at least 10 basis points and expand its asset-buying programme at its meeting on Thursday.

But after being disappointed in December, when policymakers delivered less monetary easing than they had suggested, investors doubt the ECB will be more aggressive. That could reverse losses in the euro and weigh on the dollar, boosting gold.

Gold had been supported by fairly low expectations that the Fed will raise interest rates at its March 15-16 policy meeting. The Fed lifted rates for the first time in nearly a decade in December amid signs of strength in the U.S. economy.

The strength is particularly evident in the U.S. labour market after a robust, forecast-beating 242,000 increase in nonfarm payrolls in February. Gold has stood its ground despite Friday's jobs data as many traders rule out the possibility of a near-term hike in U.S. interest rates.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, dropped to 25.4 million ounces on Tuesday, but that was not far below 18-month highs reached last week.

So, right now guys gold shows more signs that upward action probably has stopped in short term. More signs of retracement are coming right now. On daily chart bearish grabber has been formed:

Market still has not quite reached 1285 area. Now chances on final run are still exist but they become less day by day. We will not hurry with taking short position here, may be we will not take short here at all. For us major target is to get good long position, actually.

On 4-hour chart we also have clear bearish divergence:

Finally, hourly chart... Recent concern has been resolved - market has failed move higher and destroyed even theoretical chances on upside butterfly. That's why I've said that there are not many chances on reaching 1285 right now. We've got "222' Sell instead, and right now market stands at support around WPP and AB=CD completion point.
So, now wee need to watch for 1-2 session. If we will get good confirmation of downward retracement we could try to take scalp short position. If this is really daily retracement - it will have sufficient downside potential and right now we do not need to hurry, while gold still keeps chances on spike to 1285

 

[Sive Morten]

Good morning,

(Reuters) - Gold fell for a third day on Thursday, slipping further away from a 13-month high hit last week, as Asian stocks and the U.S. dollar firmed on expectations the European Central Bank will enact more stimulus to bolster euro zone economies.

The euro was under pressure, with the ECB expected to cut the deposit rate, announce more asset purchases and possibly introduce tiered interest rates like the Bank of Japan in a bid to boost inflation, according to a Reuters poll.

"Everyone's just waiting for the ECB meeting," said William Wong, assistant head of dealing at Wing Fung Precious Metals in Hong Kong.

If the ECB disappoints yet again, as they did in December when policymakers delivered less monetary easing than they had suggested, Wong said that could revive the euro and send gold to $1,280.

"We are not overly concerned about the pullback we saw in the past two days, as we think gold's uptrend remains intact as long as the metal closes above $1,246," technical analysts at ScotiaMocatta wrote.

"In our view, gold will likely consolidate here before taking a swing at $1,307," a level last seen in January 2015, they said.

Gold had benefited from low expectations that the U.S. Federal Reserve would lift interest rates at its policy meeting next week despite a recent raft of robust economic data including last week's forecast-beating employment report.

Headwinds in the global economy are likely to deter U.S. policymakers from raising interest rates soon after hiking them in December as central banks elsewhere ease policy to boost their shaky economies, analysts say.

Asian stocks edged up after New Zealand surprised markets with a rate cut, keeping investors primed for more stimulus from the ECB later in the day.

So, on Gold we do not see any big changes. As we've discussed - gold now is re-testing broken trend line of triangle. In fact, this is clue to nearest perspective. Drop below 1240 will open door to 1200 area, if market will hold above it then we could count on 1285 rally at least:

On hourly chart 1.618 AB-CD target stands at 1240 area - and coincides with trend line. Probably gold will play with it today-tomorrow. That's why currently we think that it's better to be patient and do nothing, wait a bit, what will happen with trendline. Overall action is rather slow and has more signs of retracement, so as we've said gold still keeps chances on short-term upside jump. Another reason - daily butterfly has not been completed totally... This is typical for gold guys - show signs of reversal before completion major target and then clap the trap - fast spike to the target with grabbing stops on a road... Something of that sort we could get here.

 

[Sive Morten]

Good morning,

(Reuters) - Gold climbed to a 13-month high on Friday before pulling back slightly, as the euro hovered near a three-week peak against the dollar after the European Central Bank signalled it was done reducing interest rates for now.

After rolling out bold measures to boost the euro zone economies, including increased asset buying and a deeper cut to deposit rates, ECB President Mario Draghi on Thursday signalled there would be no further rate cuts.

The next major resistance level for gold would be around $1,308, reached in January last year, said Ric Spooner, chief market analyst at CMC Markets in Sydney.

"Ultimately if this trend continues, we may well see ourselves up towards $1,400 in gold," he said.

The relatively weak U.S. dollar, despite expectations that the U.S. Federal Reserve could raise interest rates this year, as well as concerns about a wobbly global economy should support gold prices going forward, said Spooner.

"Gold remains our preferred commodity/sector in view of increasing liquidity from global monetary easing," Argonaut Securities analyst Helen Lau wrote in a research note.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose to 25.68 million ounces on Thursday, the highest since August 2014.

With the metal clinging to this year's gains, physical gold demand slowed in top consumer China this week, while a strike by jewellers protesting against the imposition of a tax curbed demand in No. 2 market India.

So, guys, gold again clap its trap as 1285 area has been reached finally. Today we easily could think about retracement down. All major short-term targets have been hit:

So, those of you who thought on short entry recently - now could start creating of trading plan, because either retracement will start now or it will not start at all.
Here we will talk initially only at minimal retracement depth. But may be later it will become stronger. Thus, right now 1230-1245 area seems as first destination point. On daily chart this is oversold level and the same trade line.
But mostly we use this level, because this is 3/8 support of butterfly swing - minimal target of this pattern.

If market somehow will drop lower and double the depth - then next destination will be 1200, but it is too early to speak about it.