GOLD PRO WEEKLY , March 27 - 31, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold rose on Friday, notching its second straight week of gains as concern about the ability of U.S. President Donald Trump to push legislation through Congress pressured the dollar, making bullion cheaper for holders of other currencies.

The dollar remained near seven-week lows against a basket of currencies ahead of a vote on a healthcare bill, formally called the American Health Care Act. Gold, seen as a safe haven asset, has benefited from falls
in the dollar, U.S. bond yields and stocks this week as Trump's difficulty in passing healthcare reform has undermined faith that he can deliver on promises of tax cuts and investment.

Spot gold was up 0.2 at $1,247.66 an ounce by 2:10 p.m. EDT (1810 GMT). The metal has risen 1.6 percent this week and on Thursday touched $1,253.12, its highest since Feb. 28. It rose nearly 2 percent a week earlier. U.S. gold futures settled at $1,248.50 an ounce.

Trump has set up a showdown with lawmakers by demanding support for the healthcare bill in a vote on Friday afternoon. "Gold seems to have done a little bit better as the day wore on as it's becoming pretty sure that this bill is not gonna pass ... That's a driving force all the way across," said Bill O'Neill, co-founder of LOGIC Advisors "The way we're looking at gold is - day to day a lot can happen that causes emotional movement in the market but looking forward, we're bullish and I'm looking for $1300 and I think you have to look at the fact that a lot of things can happen that ultimately will prove supportive for gold."

Failure to pass the bill could push gold through technical resistance at around $1,250, analysts said.
"If the market can consolidate above $1,250 in the coming days we could see an attempt at the 200-day moving average of $1,259.50," Tim Brown at MKS PAMP wrote in a note.

Away from Congress, focus was also on the U.S. Federal Reserve. Three Fed officials, Charles Evans, James Bullard and William Dudley, spoke on Friday. The Federal Reserve's delicate interest-rate hikes are
necessary given the economy is stable and any further fall in unemployment could lead to an inflation run-up, one of the most influential U.S. central bankers, Dudley, said.

Gold prices have been supported by expectations that the Fed will raise interest rates more slowly than some had feared. Higher rates tend to pressure gold by lifting the opportunity cost of holding non-yielding bullion and boosting the dollar, in which gold is priced.

Bullard said on Friday that just one more rate hike this year would be appropriate following a rise earlier this month, but that he would not fight a second one. Dudley said that "delicate" policy changes were necessary.

Evans did not address monetary policy or the economic outlook in Washington.

COT Report

Recent CFTC data could be treated as bullish probably as it shows growth of speculative net long position, simultaneously with open interest. It means that last week investors have opened new longs. The same dynamic we've discussed on EUR yesterday...

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.

At this moment overall fundamental bacground looks supportive for gold market. Right now we see few factors that could support upside action in medium-term period. Mostly they are the same as we've specified in our weekly research on EUR.

First one is Fed policy. Fed will not hurry with rate increase and will not stifle US economy by too early agressive policy. They will support inflationary growth for some time and let economy to become hot a bit. Thus, major impact of Fed policy should come in 2018. This will let gold to ride on inflation for some time in 2017.

Second - multiple elections in EU brings a lot of uncertainty and works as supportive factor for gold market. Last 2-3 decades EU was totally depended on US policy and external governing of international policy. EU did the same as US and supports all start-ups that was needed to US, in any point of the Globe, although this was not neccesary to EU countries... Now sitation is changing.

Finally, recent inability of D. Trump to push through Congress rolling back process on Obamacare program also was a negative impact on USD. Now Investors have doubts - whether he will push through tax reforms and stimulus program. Last voting shows that D. Trump will have strong headwind even from his Republican nabours and this leads to appearing a lot of questions on perspectives of Trump's noted programs in tax cutting, fiscal stimulus and supporting of domestic production.

These factors could support gold market in medium-term period. Technical picture and sentiment analysis right now also show bullish signs.

Technically 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$.
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. 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...

At this moment we do not have questions and serious doubts on perspective of H&S pattern. Market shows normal behavior for its shape. Also we have nice bullish divergence with MACD that is also typical for reversal patterns. On monthly chart we could specify two relatively close targets. First is YPR1 around 1330, next one is neckline - around 1380 area:

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 in shape of some AB-CD, for example, as upward action is possible as well. Mostly it will depend on challenging of 1250 resistance. Now gold comes to it for 2nd time:

Daily

On daily picture situation has not changed since our last discussion and it still stands bullish. All major bullish signs are the same - positive hidden divergence with MACD, trend and action around pivots. Retracement was held by MPS1, while right now price stands above the pivot and despite reaching of OB level - doesn't drop significantly.

Right now tight consolidation mostly reminds bullish flag that is forming right below 1250 resistance area. At the same time, on daily chart we have targets that stand closer to current price. Nearest one that could be reached on coming week is 1280 - MPR1. Others stand above daily OB and are not very interesting right now.

That's being said, on daily chart we do not see any bearish signs that could be dangerous for bullish setup. Upside action develops rather slow, but at the same time we have few driving factors. May be on coming week situation will change a bit, we will see:

Intraday

Intraday charts are stingy for patterns. Although daily setup looks bullish, but it is still unclear whether gold will show deeper retracement before upside breakout. On hourly chart retracement has more chances to happen rather than not to happen. Overall action is rather gradual and this is good for bullish perspective, but gold was not able to hold above short-term trend line, broken it down, re-tested and continue dropping. This increases chances on action to our 1230 support:

This, in turn, increases chances on appearing upside butterfly on 4-hour chart. It's target coinside with minor AB-CD extension around 1285 area. This is also level around MPR1:

That's being said, our short-term analysis suggests retracement to 1230 area in the beginning of the week, then upside reversal and action to 1280-1285 area...

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.

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices held steady on Tuesday as investors looked to see if U.S. President Donald Trump would be able to enact promised tax cuts and infrastructure spending, with the dollar drifting slightly higher off of multi-month lows.

Spot gold was mostly unchanged at $1,253.83 per ounce at 0557 GMT, after touching its highest in a month at $1,261.03 the day before. U.S. gold futures inched down 0.2 percent to $1,253.60.

"The markets are now starting to settle down as concerns around the implications of the failed (U.S.) healthcare bill seem to have somewhat abated," said ANZ analyst Daniel Hynes. "We're likely to see gold prices relatively steady for now until there is a little bit more clarity on Trump's other policies, particularly over the tax bill."

Trump suffered a major reversal when Republican leaders pulled legislation to overhaul the U.S. healthcare system. The blow unnerved financial markets, heightening worries about the chances of enacting tax reforms and big spending packages.

The likely upper limit for gold would be at the $1,260 per ounce level over the next couple of weeks, Hynes said, adding that the precious metal would struggle to break through its 200-day average, now at $1,259.12.
Gold has already rallied sharply from its March 15 low following a less-hawkish-than-expected policy statement from the U.S. Federal Reserve, which dampened expectations for near-term increases in U.S. interest rates.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar in which it is priced. The markets also took stock of separate statements from Fed officials on Monday, with Chicago Federal Reserve Bank President Charles Evans saying the case for four rate hikes this year is not yet solid and would require a stronger lift in inflation.

"We remain constructive about gold in the short term," INTL FCStone analyst Edward Meir said, adding that further weakness in the dollar could push gold higher. The dollar limped off multi-month lows against major peers on Tuesday.

Meanwhile, the world's largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares , reported an inflow of 2.7 tonnes on Monday.

So, on gold market short-term context stands bullish. Market has no resistance by DiNapoli framework - no Fib levels, OB/OS, but it has natural resistance around 1260 area. Still, as market stands rather tight below it, upside breakout could happen soon. Next daily destination point here is MPR1 and OB level around 1275:

Taking a look at farer perspective, next target will be around 1283-1285 as AB-CD objective point and possible butterfly, if gold will show meaningful retracement before breakout:

Retracement right now looks probable as it starts on other markets as well. Thus, here we should keep an eye on two levels - First one and K-support. In this case we could get butterfly on 4-hour chart.

That's being said, now it is not a question whether gold will continue move up, but how it will do it - with retracement or without it...

 

[Sive Morten]

Good morning,

(Reuters) - Gold fell on Wednesday in the face of technical resistance and positive economic data that boosted expectations for further U.S. interest rate hikes this year, supporting the dollar and equities markets.
"A resurgent U.S. dollar, along with higher U.S. yields and equities has taken the momentum out of the gold rally for now," said Jeffrey Halley, senior market analyst at OANDA.

The metal was also under pressure after failing to break through its 200-day moving average at $1,260, Halley said, posting its second consecutive down day in Asia. Spot gold was down 0.3 percent at $1,248.32 per ounce at 0325 GMT. U.S. gold futures slipped 0.6 percent to $1,247.9.

The dollar pulled away from 4-1/2-month lows against a currency basket on Wednesday as solid data backed expectations for more U.S. interest rate hikes this year. Reinforcing rate hike expectations, U.S. consumer confidence index hit 125.6 in March, surpassing expectations for a reading of 114 and much higher than 116.1 in February. The March level marked the highest since December 2000.

U.S. Federal Reserve Vice Chairman Stanley Fischer also gave the dollar a lift as he said in a television interview that two more increases to U.S. overnight interest rates this year seemed "about right." "Perhaps the expectations of a June rate hike have gone up, given the recent statements from the central bank officials," said Jiang Shu, chief analyst at Shandong Gold Group.

The yellow metal was likely to continue the downward momentum through Wednesday to around the $1,235 an ounce level, he added. A strong greenback makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand.

Meanwhile, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, which is considered a gauge of investment demand, reported an outflow of 1.8 tonnes on Tuesday.

Gold prices could continue to be slightly pressured into the next month or so, especially as the market awaits key economic data from the United States for further clarity on U.S. interest rate hikes, Shu said.

Gold bullion investment will rise for the fourth straight year in 2017 as global political and economic factors are forecast to maintain buying interest, CPM Group said on Tuesday.

So, on gold market actually not much to comment... On daily chart bullish setup is still valid, market is coiling around 1260 resistance. Price has not barriers from Fibonacci tools and OB, but 1260 is natural support/resistance zone. Now it seems that gold will spend some time for preparation of breakout which could take shape of meaningful retracement to 1235-1240 area:

This, in turn, could give us not just AB-CD target but also upside butterfly with the same 1285 destination point:

Price action on hourly chart also suggests a bit deeper retracement, as CD leg shows downside acceleration and is steeper than AB. That's why odds suggest that another leg down to K-support looks more probable than immediate upside reversal:

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices fell on Thursday as the dollar strengthened, but uncertainty surrounding the impact of
Britain's departure from the European Union and the upcoming French elections offered some support.
Gold is witnessing a correction after failing to break above its 200-day moving average around the $1,260 level, analysts said.

"But prices are not likely to witness a big drop particularly because of the Brexit and French elections as they
(are offering) very good support for gold at this time," said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.

Spot gold was down 0.2 percent at $1,249.85 an ounce by 0419 GMT. U.S. gold futures were 0.4-percent lower at $1,249.30.

Prime Minister Theresa May formally began Brexit - Britain's divorce from the EU - on Wednesday, declaring there was no turning back and ushering in a tortuous exit process that will test the bloc's cohesion and pitch her country into the unknown.

"The market seemed to take the notification of the article 50 in the UK relatively smoothly, but I suspect the worst is yet to come on that. We'll see how negotiations develop and the market is taking the wait and see approach at the moment," said ANZ analyst Daniel Hynes. "But certainly, there was a tiny bit of safe-haven buying."

Meanwhile, French centrist Emmanuel Macron is on course to come out on top of the first round of France's presidential election next month and go on to win in the May 7 runoff against far right leader Marine Le Pen, an Elabe poll showed on Wednesday.

Also pressuring gold was the dollar, with the greenback edged up to a nine-day high against a basket of currencies on Thursday, with the euro sagging as the European Central Bank showed no sign of stepping away from monetary easing anytime soon.

A strong greenback makes dollar-denominated gold more expensive for holders of other currencies, potentially decreasing demand. The dollar was also boosted by Chicago Fed President Charles Evans, who said he was in line with most of his colleagues in supporting further rate hikes this year.

So, on gold market situation is very similar to FX market. Daily picture stands stable, while major interest is how deep retracement could be. We already have specified upside targets. As context stands bullish, our first target is MPR1 around 1278.

second - extensions, based on 4-hour chart patterns around 1285:

The fact that price is coiling right below major daily resistance looks bullish and increases chances on soon challenge of 1260 area. Meantime, yesterday we've come to conclusion that gold still could show a bit deeper retracement right to 1240 K-support area. Right now it seems that price has two targets around this level. They are AB=CD and potential butterfly buy (which is very similar to EUR and GBP). That's being said, we probably will wait a bit more as 1240 area looks more attractive and safer for position taking:

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices edged lower on Friday and were headed for a weekly decline as positive U.S. economic data buoyed the dollar, but uncertainty over upcoming elections in Europe and Britain's exit from the European Union capped losses.

"In the short term, factors including a strengthening dollar could pull prices down to around the $1,230 an ounce range," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo. "However, the fundamentals are still bullish for gold, especially with the upcoming elections in France and elsewhere
in Europe. So prices are not really expected to go much lower from here"

Spot gold was down 0.2 percent on the day at $1,240.45 per ounce at 0255 GMT, and was set for a similar sized weekly loss, which would be its first weekly decline in three. U.S. gold futures fell 0.4 percent to $1,239.70. The dollar index was up 0.1 percent at 100.54, near a two-week high hit earlier in the session, supported by solid U.S. economic data.

U.S. economic growth slowed less than previously reported in the fourth quarter as robust consumer spending provided a boost that was partially offset by the largest gain in imports in two years. The greenback was further supported by comments from New York Federal Reserve President William Dudley that reinforced the notion that core U.S. central bankers are confidently on the road to tighter monetary policy after having hiked interest rates twice in three months.

Meanwhile, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, which is seen as a gauge of investment sentiment, reported an outflow of 1.2 tonnes on Thursday. However, the potential for the rise of the far right in European elections this year, along with British Prime Minister Theresa May formally triggering divorce proceedings from the EU on Wednesday enhanced gold's appeal as a safe-haven investment.

The EU will tell Britain on Friday how it aims to negotiate its "orderly withdrawal" from the bloc, limit uncertainties for businesses and pave the way for a close future partnership.

Gold market has completed our short-term targets while it keeps bullish context on daily chart. Here we have hidden bullish divergence with MACD, minor gradual retracement. Today we will be watching for another bullish pattern that could be formed - bullish stop grabber as price stands very close to MACDP line:

On 4-hour chart we've specified our next target - 1285:

On hourly chart gold has completed our AB=CD target and butterfly. So gold stands at rather strong support area that includes K-support and Agreement. This is an area where upside action could start again. So let's see what we will get at today's close and whether we will get daily grabber: