GOLD PRO WEEKLY , March 20 - 24, 2017

Sive Morten

Special Consultant to the FPA
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Fundamentals

(Reuters) - Gold rose on Friday and was on course for its first weekly gain in three as the U.S. Federal Reserve's cautious message on interest rates left the dollar around five-week lows, making bullion cheaper
those holding other currencies.

The Fed raised U.S. rates on Wednesday, as expected, but its earlier forecast of three rate increases this year remained unchanged, disappointing some investors who had hoped for hints of a possible fourth hike in 2017.

Spot gold was up 0.2 percent at $1,229.40 an ounce by 2:53 p.m. EDT (1853 GMT), taking this week's gain so far to 2.1 percent. Prices hovered just below the Thursday session high, when the metal reached $1,233.13, its highest since March 6. It rallied 2.3 percent on Wednesday and Thursday following
the Fed's statement.

"Everything's quieted down today. The surge we've seen in the last couple of days has been correlated with what we've seen in bonds and stocks," said Rob Haworth, senior investment strategist for U.S. Bank Wealth management in Seattle. "On the retail side, you're making enough money on stocks that you're probably not as worried about jumping back into gold."

U.S. gold futures settled up 0.3 percent at $1,230.20.

"There is momentum as people start to look again how far they can push gold higher," said Georgette Boele at ABN AMRO. The dollar had hit a ceiling and would fall further in the near term, she said.

U.S. President Donald Trump's failure so far to push through promised economic stimulus measures may have influenced the Fed, said Tom Kendall at ICBC Standard Bank. "If infrastructure spending and tax cuts are being pushed further and further out, it gives the Fed more reason to be cautious," he said. "That is a bit of a vacuum that gold can rally into."

Rate rises lead to higher bond yields, which increase the opportunity cost of holding non-yielding bullion and tend to boost the dollar, in which gold is priced.

Investors were also looking ahead to the Group of 20 (G20) finance leaders' meeting in Germany this weekend, where any attempt by the Trump administration to pursue protectionist policies could fuel demand for gold as a safe-haven.

Holdings of the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares , fell 0.28 percent on Thursday, the first outflow this week.


COT Report

CFTC data shows typical changes for retracement. Gold turns down and speculative long position has contracted as well as open interest. It means that investors start to close longs. This process lasts for 3 recent weeks. At the same time it doesn't indicate new bear trend, because when trend starts - open interest should rise. Thus, CFTC data doesn't bring nothing important by far.
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Technicals
Monthly

As gold shows no return back to 1100 lows - it keeps reversal moment of our H&S pattern pretty nice by far. We've talked a lot about large patterns and far perspectives on gold market. As gold stands in retracement on daily chart, swings length has decreased significantly. Thus, we mostly has no impact on monthly chart. Bearish engulfing pattern that we've discussed last week has changed it shape now and hazard of it's appearing is stepped back by far. It means that we need to wait till March close.

We mostly have the same view on longer-term perspective. Fundamental background for gold market right now 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$. Surely Fed is out of our control and prediction and last week is great example of this - as chances on rate hike in March doubles.
Still we have new input here - neutral comments on further rate hike. As Fathom consulting suggests - Fed will lead economy to become hot a bit before aggresive rate policy. This should open door for inflation growth, which is supportive factor for gold. Currently gold could stay on its own till June and this could encourage investors to be more brave in taking long positions.

Concerning farer perspective we could 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.

This is long political talk though, but shortly speaking, we see that the process of building new EU has started. First bell is Brexit. As you know all mature EU countries has started gold repatriation process that should be finished in 2020. So we should be oriented on this year as appearing of the shape of new EU. By gold repatriation process we could gudge on major idea of new EU - each country will out of external governing either Brussel or US and will make it's own policy according with their own national interests. This is how it should be in theory. How this process will develop on practice - we will see.

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, although COT data and SPDR fund statistics starts to support it.

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. Definitely gold will have different sources of headwind, but real uncertainty mostly comes from political sphere as in US as in EU and unexpected changes in Fed policy. They are become major driving factors for gold and they overcome expected 3 rate hike by Fed in this year:
gold_m_20_03_17.png


Weekly

Currently weekly chart does not bring something special. Overall picture looks bullish, trend stands also bullish. Bearish engulfing pattern mostly has completed it's target and we see strong upside bounce. Despite that this drop looks solid on daily chart - here this is just minor retracement to 3/8 Fib support.

Now here we have just trend context, it's bullish. But unfortunately gold here doesn't bring any more clarity on perspective. As deep retracement is possible and it will not destroy bullish setup yet, as upward action is possible. So answer we should search on lower time frames:

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Daily

On daily chart trend also has turned bullish. Although as we've suggested gold has moved slightly higher on Friday, but still, upside potential is limited right now, as gold stands at resistance - daily OB and MPP.

Here we've got another bullish sign - hidden bullish divergence. This is positive sign for possible upside continuation. Still, intially some retracement has more chances to happen...
gold_d_20_03_17.png


4-hour

So, as we've estimated gold has not bad perspectives for upside continuation on coming week, but first minor retracement down probably should happen. THus, to trigger it, gold probably should form some bearish reversal pattern.
Here it seems that butterfly is very suitable for this purpose. Thus, on Monday gold could reach 1236 area and then start gradual action down. First level to watch for is 1220. This is Fib support and WPP:

gold_4h_20_03_17.png


Conclusion:
In long-term perspective we think that bullish factors overhelm headwind of possible rate hike by Fed. Still this probably will lead to turmoil and excessive volatility, but we hope that this will happen with upside direction. Fed probably will let economy to become hot before they will start aggressive tightening, thus right now gold has some time, when investors could take longs without any fear be trapped by unexpected rate decision.

In shorter-term perspective this leads to appearing of some bullish signs on daily chart that we will check out on coming week.



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 prices edged lower on Tuesday, failing to break a key resistance but hovered near a two-week high hit in the previous session on prospects of a less-hawkish Federal Reserve policy.

The Fed is likely to wait at least until June policy meeting to decide whether to lift U.S. interest rates again, Chicago Fed President Charles Evans said on Monday.

Spot gold was down 0.4 percent at $1,228.61 per ounce, as of 0556 GMT. In the previous session, it touched its strongest since March 6 at $1,235.50. U.S. gold futures fell 0.4 percent to $1,228.60.

"What we are seeing is a bit of washout in short-term positioning as gold is unable to surpass the strong resistance at $1,237," said Jeffrey Halley, senior market analyst at OANDA. "But, there is no other way than looking bullish at gold for the moment. There are extended positions in dollar. We are going to see this dollar correction running for a while, which will support gold."

Spot gold is expected to drop to $1,221 per ounce, following its failure to break a resistance at $1,237,Reuters technical analyst Wang Tao said. "It looks like some weak longs stopped out this morning, but expect to see good buying between $1,215-$1,225 area," a Hong Kong-based precious metals trader said.

The dollar index , which measures the greenback against a basket of currencies, was down 0.2 percent at 100.240. The lack of a concrete policy from U.S. President Donald Trump's administration is worrying investors and more people will opt for gold when the stock markets go lower, analysts and traders said.

Expectations that the Fed will have to step up rate hikes to counter inflationary pressure from Trump's stimulus are also waning after the central bank dropped no hints of an acceleration in credit tightening last week. Fed's Evans, in one of the first official comments after the Fed raised rates, said the U.S. central bank needs time to digest economic and financial market data as well as any clarity on the Trump administration's fiscal policy plans.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.46 percent to 830.25 tonnes on Monday from 834.10 tonnes on Friday. Holdings fell for a third straight session on Monday.

"A lot of people have bought gold at pretty unattractive levels and are discarding after seeing interest rates going up. But, I would expect those positions to comeback strongly once gold breaks past the 200-day moving average around $1,262," OANDA's Halley said.


So, we do not have significant changes since our last discussion. As we've said - although we have potentially short-term bullish setup here, but gold need some relief before upside continuation as it stands at daily OB, MPP and Fib level. Actually this combinaiton gives us DiNapoli daily bearish "Stretch" pattern.
Thus, we've come to conclusion that upside action could continue only after retracement:
gold_d_21_03_17.png


Our puny butterfly that we've suggested - has been completed and gold has turned down. If retracement will be gradual, the first level where gold could turn up again will be an area around WPP and 1220 Fib support:
gold_4h_21_03_17.png


Thus, today we have a passive day, guys. Just need to watch in what manner gold will reach 1220 area.
 
Good morning,

(Reuters) - Gold prices rose to a three-week high on Wednesday as risk-averse investors dumped equities amid a weaker dollar and sought safe havens on growing doubts about U.S. President Donald Trump's economic agenda.

Spot gold had risen 0.3 percent to $1,247.56 per ounce by 0644 GMT, after touching a three-week peak of
$1,248.47. U.S. gold futures were firm at $1,246.30. The dollar index , which measures the greenback
against a basket of currencies, was at 99.761, near the six-week low of 99.642 reached on Tuesday.

Asian stocks fell on Wednesday as growing doubts about President Trump's economic growth agenda prompted investors to dump risky assets. "It seems that equity investors decided to take some money off the table, perhaps getting slightly wary about the progress in President Trump’s legislative agenda," INTL FCStone analyst Edward Meir said. "Gold will likely continue to rally going into Wednesday’s session as Tuesday’s U.S. stock market selloff was significant and will likely have a knock-on effect on international equity markets over the next 24 hours."

Gold has rallied nearly $50 from last Wednesday's low following a less hawkish policy statement from the U.S. Federal Reserve.

"The re-positioning of investors since the FOMC meeting continues unabated, with investors becoming less bearish as a result of the subdued outlook for rates in 2018," ANZ analysts said in a note.

The lack of a concrete policy from the Trump administration is worrying investors and more people will opt for gold as a safe-haven investment when the stock markets go lower, analysts and traders said.

"With the fate of the health care bill uncertain, more important legislation that equity investors want to see passed, namely, tax reform and infrastructure spending are both bottled up and languishing," Meir said.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose 0.50 percent to 834.40 tonnes on Tuesday from 830.25 tonnes on Monday. Holdings rose 4.15 tonnes on Tuesday after three straight sessions of outflows, underpinning investors' interest in the metal.

"Gold looks well positioned for a test above resistance at$1,248-$1,250," MKS PAMP Group trader Sam Laughlin said.


So, although our daily suggestion was correct, hidden bullish divergence has given us a signal of coming upside continuation - gold has not shown retracement that we've expected and jumped up immediately. On a way up gold has broken 5/8 resistance and WPR1, moved above MPP again. Now it has now signficant resistances till the top around 1265. Overall action develops rather fast.

Taking in consideration our fundamental view on gold and Fed policy, current rally could become continuation of big weekly trend:
gold_d_22_03_17.png


On today session market has only one limit - dialy OB level that stands around 1253-1255 area. Also this level is minor Fib resistance that we rare use and natural support/ resistance area. Thus, this is most probable upside limit for today:
gold_4h_22_03_17.png


But in medium term perspective upside action should continue and we should keep an eye on possible deeps that could give nice chances for entry.
 
Good morning,

(Reuters) - Gold prices on Thursday held below a 3-week peak hit in the prior session, as the dollar recovered from seven-week lows and markets looked to see if U.S. President Donald Trump could push through a healthcare bill.

Spot gold was down 0.2 percent at $1,246.51 per ounce at 0353 GMT. On Wednesday, it touched its strongest since Feb. 28 at $1,251.26. U.S. gold futures were down 0.3 percent at $1,246.5.

"There is a strong technical resistance at $1,250 and that seems to have been felt strongly at this juncture," OCBC analyst Barnabas Gan said.

Spot gold may retrace to a support at $1,237 per ounce, following its failure to break a resistance zone of
$1,247-$1,254, according to Reuters technical analyst Wang Tao.

However, Gan pointed to the impact of sustained political issues in Europe and the United States. "This kind of uncertainity does lift gold prices," he said.

The immediate focus is on whether Trump can gather enough support in a vote as early as Thursday to pass a bill to roll back Obamacare, a first major test of his legislative ability and whether he can keep his promises to business. Trump and House of Representatives leaders were pushing on Wednesday for votes for their plan, and said they were making progress in their efforts to win over conservative Republicans who have demanded changes to the legislation. However, a rough ride for the healthcare plan could affect Trump's efforts to cut taxes and and boost infrastructure, and drive more investors into gold as a safe-haven investment if stock markets fall, analysts and traders said.

The dollar index , which measures the greenback against a basket of currencies, was up 0.1 percent at 99.782. It fell to a near seven-week low of 99.547 on Wednesday.


Although we have bullish setup on gold market - today gold, and all other markets are hostages of Congress voting as it will be litmus paper test for Trump administrationg to get results in Congress. That's why, we do not expect any activity till the evening today and may be it would be better to do nothing at all.

Technically we have the same issue as yesterday - no real barriers for upside action except daily OB that today stands at 1260. Our short term target here stands at MPR1 and our former AB-CD target @ 1278.
In general gold here shows bullish behavior - retracement down was held by nearest 3/8 Fib level and MPS1. It means that that was a retracement inside bulltrend. Now market stands above MPP and shows clear bullish divergence. Thus, upside action should continue in one manner or another:
gold_d_23_03_17.png


On 4-hour chart gold has completed our yesterday upside limit around 1252 and has not broken yet natural resistance area. Whether it will do it today mostly will depend on Congress voting on rolling back of Obamacare program:
gold_4h_23_03_17.png


That's why action today could be different. Oh hourly chart gold could form minor H&S and start downward retracement, if Trump will succeed, or will show upside breakout of 1255 area if not...
gold_1h_23_03_17.png


That's being said, as situation is mostly driven by gambling political factor that we can't control, it would be better to sit on the hands and watch what will happen...
 
Good morning,

(Reuters) - Gold slipped on Thursday as the dollar firmed, while palladium extended gains to hit a two-year high on economic data and demand from the automobile sector.

Spot gold was down 0.3 percent at $1,245.26 an ounce by 2:21 p.m. EDT (1821 GMT), retreating from an intraday peak of $1,253.12, its highest since Feb. 28. U.S. gold futures shed 0.3 percent to $1,246.60.

"The dollar has been a little bit stronger today, interest rates climbed up a touch and the stock market finally gave a positive performance prior to tonight's vote on healthcare - all of which means gold traders have pulled back a little," said George Gero, managing director at RBC Wealth Management.

The dollar index , which measures the greenback against a basket of currencies, was slightly firmer at 99.769. It had dropped to its lowest in nearly seven weeks at 99.547 on Wednesday. U.S. stocks rose slightly on Thursday, with gains limited by signs that President Donald Trump was struggling to get enough votes to pass a healthcare bill in Congress, while European shares rose on bank borrowing and oil prices slipped.

The immediate focus is on whether Trump can gather enough support to pass a bill to roll back Obamacare, representing a major test of his legislative ability and whether he can keep his promises to business. A rough ride for the healthcare plan could affect Trump's efforts to cut taxes and boost infrastructure, with the potential to drive more investors to gold as a safe haven if stock markets fall, analysts and traders said.

The dollar briefly slipped on Thursday after U.S. jobless claims rose unexpectedly, sending gold temporarily higher.

But the dollar rebounded after the market realized that jobless levels remained below a level associated with a strengthening labor market. The greenback added gains on news that February U.S. new homes sales hit a seven-month high.

From a technical standpoint, gold's almost "V-shaped recovery" from the key $1,200 handle suggests more gains are likely, analysts said.


So, as voting in Congress on Obamacare bill has been postponed on today session - no real action we see on gold market. Price has turned to retracement. On daily chart overall bullish context is still valid:
gold_d_24_03_17.png


As we've estimated, gold has reached long-term natural support/resistance area and now is turning down out from it. This, in turn, increases chances on appearing of butterfly pattern with 1285 and 1305 destination points. Butterfly mostly stands in context of daily chart.

On hourly chart gold has shown clear W&R at top. Downward action looks rather gradual. Thus, retracement should not be too deep and it seems 1230-1232 Fib level is the one where it could stop.
gold_1h_24_03_17.png
 
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