GOLD PRO WEEKLY , May 29 - 02, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold rose to its highest in nearly four weeks on Friday as political uncertainty led investors to favor bullion over assets considered riskier such as stocks.

"We have had the political noise coming from Trump and the U.S. administration and there is a certain element of uncertainty in the markets in general, which is supporting gold. Equities are also down," analyst Carsten Menke at Julius Baer in Zurich said.

Leaders of the world's rich nations face difficult talks with Donald Trump at a G7 summit in Sicily on Friday after the U.S. president lambasted NATO allies and condemned German trade policies a day earlier.
Gold is often a favored investment during times of political and financial uncertainty. Spot gold gained 1.1 percent at $1,268.69 an ounce by 2:19 p.m. EDT (1819 GMT), the highest since May 1. It was on track to close the week up around 1 percent, the third straight week higher. U.S. gold futures settled up 0.9 percent at
$1,268.10.

Many traders will be away from their desks for an extended Memorial Day holiday weekend in the United States and in Britain, with many financial markets closed on Monday, when U.S. gold futures will close early.
"We do expect a (U.S.) rate hike in June and we see the dollar strengthening again," said Menke. "On the upside, there's a lot of uncertainty, which keeps people from selling gold and maybe causing a little bit of buying."

Data on Friday showed U.S. gross domestic product grew at a 1.2 percent annual rate in the first quarter instead of the 0.7 percent pace reported last month, supporting the dollar.

"Oddly enough, the gold price is holding more ground than many traders may have expected on these positive economic releases out of the U.S.A," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York. "Though technically, the precious metals market appears to be strong, the positive economic view is likely to prevail at some point against it."

COT Report
In recent 4 weeks chart shows classical data for retracement. As price goes down, net speculative long position has decreased, but open interest also has dropped. It means that some longs were closed, but no new shorts were opened.
Right now, as you can see, CFTC data shows bullish sentiment as new longs were opened recently - speculative position has increased again on a background of growing open interest. Last week we also talk on divergence between SPDR fund statistics and price action. While gold starts dropping, SPDR storages stands flat and shows that investors mostly hold long positions. This is very clear sign of retracement, but not a reversal on gold market.

Technicals
Monthly

So, guys, as we've talked many times already - gold way will not be streight. We still keep bullish view on gold market. Right now, we see that our two major backwind factors for gold are working. They are - D. Trump political volatility and uncertainty and - careful Fed policy that, as we suggest, will not tight economy growth by agressive rate policy in 2017. Both of them have provided support to gold, or better to say - depressed USD las week.

From technical point of view our major pattern is reverse H&S on monthly chart. 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.

We will change our opinion if market will drop below 1170 area. In this case gold will meet the hazard to get butterfly pattern with 1000 and lower targets.

Right now we have new feature here - potential bullish stop grabber. As there are fewer time till the May close as more chances that it will be formed. This pattern really will have special meaning for us, because, at least theoretically, it shoud push prices above 1380...

Weekly

Last week trend has turned bullish here as well. Price returns back to 1278 Fib resistance that already has been tested once. By recent close gold also has erased bearish grabber that has been formed 2 weeks ago and we have mentioned our concern on it.

Overall picture still stands bullish in larger perspective. Here we see upside breakout of downside channel and re-testing it later. As retracement already has happened, current upward action should be treated as upside extension stage...

Still currently weekly chart does not show any clear patterns and breakout of major levels. Thus, it brings no new inputs by far.

Daily

Daily chart mostly shows bullish picture as well. Our last suggestion on drastic changes, when price even has not made any attempt to break 1250 lows was correct. Indeed, price has formed triangle and shows upside breakout here. At the same time gold has broken 5/8 Fib resistance @ 1264 area.

As market stands not at overbought, trend holds bullish, gold should continue upside action. Now it has reached MPP.

Here we need to keep an eye on retracement's depth. It should be small. Price should not return back in triangle consolidation. If this will happen - we should be ready for deeper downward action.

4-hour

Here guys, we have clear pattern that we've started to trade on Friday. You even can see my entry order that has been triggered. This is short-term trade and is based purely on butterfly shape.

Gold market has a habit to show deep retracements. Another habit is to re-test previously broken important levels. Trend line of broken triangle will be extremely important for daily chart. But at the same time, it coincides with Fib support and WPP. That's why our profit objective stands around it.

But this butterfly has some nuances. Take a look at acceleration candles on a way up and uncompleted 1.618 AB-CD target. When you intend to trade 1.27 extension of butterfly - you need to buy insurance till 1.618 target. Other words, your stop should be above it. This is just butterflies should be traded. That's why, those of you, who think about trading of this pattern needs to decide - wait until 1.618 target will be hit around 1273 and take position with smaller risk, or, trade 1.27 entry point, but take the risk of farer stop... This issue demands some money management, position adjustment etc.

If our suggestion will be correct and gold will show reaction on butterfly - our next step is thinking on long position , if price will drop back inside triangle of course....

Conclusion:

Thus, although gold shows deep retracement, but we do not see any real hazard for long-term bullish trend yet. So, it is too early to panic and scream that "everything is lost". Market could form even 1190 retracement, but this will not hurt long-term bullish tendency yet. Besides, investors shows weak reaction on gold drop and mostly keep long positions in gold.

Short-term gold sentiment turns bullish again. Although we have setups for scalp bearish trading on butterfly's retracement, but in general our view is bullish and as soon as gold will "work out" this butterfly, we could get nice chances to go long with farer going perspectives.

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 edged up to touch a one-month high on Tuesday, with investors turning to the safe-haven asset as geopolitical tensions sapped their appetite for risk.

Spot gold had risen 0.1 percent to $1,267.70 per ounce by 0349 GMT. It earlier touched its strongest since May 1 at $1,270.47. U.S. gold futures were almost unchanged at $1,267.70 an ounce.

Risk surrounding the closeness of Britain's upcoming elections, the prospect of early elections in Italy and worries over Greek debt were supporting gold, said Jeffrey Halley, a senior market analyst at OANDA. "The picture will get more muddy as the week goes on as we have a lot of data from around the world coming in," he said.

British Prime Minister Theresa May's lead over the opposition Labour Party dropped to 6 percentage points in a poll published on Tuesday, with the election due next week.

In Italy, former prime minister Matteo Renzi suggested on Sunday that the country's next election be held at the same time as Germany's amid mounting speculations that Italians could head to the polls in the autumn. Germany will vote on Sept. 24, while elections are due in Italy by May 2018. Meanwhile, euro zone finance ministers failed to agree with the International Monetary Fund last week on Greek debt relief as well as failing to release new loans to Athens.

"The ongoing political uncertainty in the market is really driving safe-haven buying at the moment," said ANZ analyst Daniel Hynes. "Weaker equity markets certainly have played their part, but support from that has been sporadic and we're continuously seeing a strong level of safe-haven demand being the primary driver still."

Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold may rise to $1,276 per ounce, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

In wider markets, the geopolitical fears over Europe weighed on Asian stocks and kept the euro under pressure.

On gold market price is still coiling around MPP as it has broken above Fib level and pennant. As we've talked many times, we have bullish view on gold, but to take position we need some deep to buy. At the same time, it will be crucial moment when price will re-test broken border of the pennant. If gold indeed is bullish, it should not return back inside it:

Today we also have new inputs. As you can see on 4-hour chart price has formed nice bearish divergence with MACD line:

Another reason, why we think that this retracement should happen sooner rather than later is hourly butterfly . As it is reversal pattern, some minor retracement should happen as it will be completed - either from current level, or when 1.618 extension will be completed. This lets us to trade butterfly as well, as separate pattern, while we're waiting for entry point for daily setup:

If you would like to trade butterfly as well - do not repeat my trade that you see on the chart (it's a bit tricky and needs additional management), but better wait 1.618 butterfly target for short entry. This will be safer and easier type of butterfly trading.

 

[Sive Morten]

Good morning,

(Reuters) - Gold fell for a third day on Wednesday, set for its first monthly drop since December, as U.S. economic data boosted the case for an interest rate hike by the Federal Reserve next month.

U.S. consumer spending recorded its biggest increase in four months in April and monthly inflation rebounded, pointing to improving domestic demand that could allow the Federal Reserve to raise interest rates next month.

Spot gold was down 0.3 percent to $1,259.51 per ounce at 0330 GMT. Prices fell by the same amount on Tuesday after earlier rising to a one-month high of $1,270.47. For the month, bullion is set to drop 0.6 percent.
U.S. gold futures dipped 0.3 percent to $1,258.90.

"U.S. employment data coming this Friday and its affects on the Fed rate hike decision next month will be crucial," said Yuichi Ikemizu, Tokyo branch manager at ICBC Standard Bank. A U.S. rate hike is probably coming soon though the Federal Reserve may want to delay if inflation remains soft, Fed governor Lael Brainard said on Tuesday.

Interest rate futures on Tuesday are indicating a nearly 89 percent chance of a June hike, according to CME Group's FedWatch tool. Higher rates would reduce the demand for non-interest bearing bullion as well as boosting the U.S. dollar in which gold is priced.

Political tensions in the U.S. and Europe continue to support gold and have prevented any major losses for the metal, Ikemizu said.

British Prime Minister Theresa May's Conservative Party risks falling short of winning an overall majority of seats in parliament in a national election on June 8, The Times newspaper said on Tuesday, quoting research by polling firm YouGov.

In Italy, the 5-Star Movement voted over the weekend in favour of a proportional electoral system, raising the chances of an unprecedented autumn parliamentary election.

Spot gold may break a support at $1,257 per ounce and fall to the next support at $1,245, according to Reuters technical analyst Wang Tao.

"The extended short term long positioning and a lack of upside momentum may be signalling that a correction lower may be on the cards," said Jeffrey Halley, a senior market analyst at OANDA.

So, on gold market our setup for the week mostly has been completed. The combination that we had was really strong, I mean MPP resistance, butterfly "Sell" pattern and gold's habit to re-test broken lines. As a result it has led to 3/8 retracement back to trendline, that is what we've discussed in weekly research:

Current moment is very important for gold, because it will make clear short-term direction. If price will hold above broken triangle, gold will keep chances on upward continuation. While drop down will lead to opposite triangle breakout and deeper downward retracement, that could last some weeks.
Currently, as you can see, gold stands well around resistance:

Definitely it is not time yet to go short, but if you're searching chances for long entry - drop your time frame and watch for bullish patterns. For example, right now you could find butterfly on 15-30 min chart that is forming around...may be it will be useful for your trading plan.

 

[Sive Morten]

Good morning,

(Reuters) - Gold held steady on Thursday, after hitting a five-week high in the previous session, supported by
geopolitical tensions and a weaker dollar, but expectations the U.S. Federal Reserve will hike interest rates this month weighed on prices.

Spot gold was down 0.03 percent at $1,268.46 per ounce at 0407 GMT. On Wednesday, it touched a session high of $1,273.74 an ounce, its strongest since April 25. U.S. gold futures fell 0.3 percent to $1,268 an ounce.

"We are seeing some safe haven demand for gold ahead of elections in the UK next week and Friday's U.S. non-farm payroll data," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Prime Minister Theresa May could lose control of parliament in Britain's June 8 election, according to a projection by polling company YouGov, raising the prospect of political turmoil just as formal talks for the country to leave the European Union begin.

Positive payroll data from the United States could mean the Fed will raise rates as expected at its June 13-14 meeting. Traders believe there is an 87 percent chance of a rate rise, according to CME Group's FedWatch tool. The higher rates would lower investor demand for non-interest bearing gold.

San Francisco Federal Reserve Bank President John C. Williams said on Wednesday that three rate increases are most likely this year. However, some recent soft U.S. economic data has raised questions whether the Fed will stay with that plan.

Spot gold may retrace to $1,257 per ounce, as it failed to break a resistance at $1,272, according to Reuters technical analyst Wang Tao.

President Donald Trump's decision on Thursday on whether the United States will continue to be part of the global pact to fight climate change will also be keenly watched, analysts said.

"A withdrawal in itself shouldn't be bearish for the U.S. dollar in isolation; rather it is the intent that it signals,"
said Jeffrey Halley, a senior market analyst at OANDA. "In this case a more isolationist stance from literally, the rest of the world's view. This could see that geopolitical temperature gauge rise again, taking gold with it."

In the wider markets, the dollar languished near a recent 6-1/2 month low against a basket of major currencies on Thursday.

So, on gold market, scenario that we've discussed in weekly research has been completed - price has shown minor retracement and re-tested broken pennant pattern. What's next?
Here we're coming to most crucial moment. If we will take a look at wider daily chart, we will see that gold stands in bullish tendency - it forms higher bottoms and higher tops. So, to keep this tendency and confirm it's bullishness, price has to form higher top. If we will not get it - this will tell us that upside trend stands under question and we could get, say, H&S pattern here, with well-known consequences. But collapse will start with moment of price return back inside the pennant, i.e. failure pennant breakout. That's why this is very important.

On 4-hour chart we have 3-Drive "Sell" pattern. If it will work - market could re-test trend line again around 1255 area:

Or, we could get "222" Buy pattern around 1262 area... Here mostly it will depend on NFP data probably. But anyway, whatever scenario we will choose - either "222" or 3-Drive, invalidation point will be the same - breakout of pennant trend line. If this will happen, bullish scenario will be destroyed...

 

[Sive Morten]

Good morning,

(Reuters) - Gold fell on Friday to hit its lowest in a week, with stock markets climbing and the dollar firming after upbeat U.S. private sector job figures appeared to boost the prospects for an interest rate hike this month. Investors will be looking for further clues on the timing of rate rises in U.S. non-farm payroll data due later in the day.

Spot gold had dropped 0.3 percent to $1,260.96 per ounce by 0404 GMT. It earlier touched its weakest since May 26 at $1,258.60. Gold has fallen 0.4 percent for the week and could register its first weekly decline in four weeks. U.S. gold futures fell 0.5 percent to $1,263.50 an ounce.

"A stronger dollar and firming U.S. equity markets, along with weaker oil are all headwinds that could hamper gold's advance over the short-term," said INTL FCStone analyst Edward Meir. "But on the flip side, the fact that prices have not dropped significantly so far suggests that funds continue to buy the dips."

U.S. factory activity ticked up in May after slowing for two straight months and private employers stepped up hiring, suggesting the economy is regaining speed after struggling at the start of the year. Federal funds futures implied traders saw a 96 percent chance the U.S. central bank would increase key overnight
borrowing costs by a quarter point, to 1.00-1.25 percent, at its June 13-14 policy meeting, CME Group's FedWatch program showed.

Fed Governor Jerome Powell said the U.S. economy was "healthy" and the central bank should continue to edge towards a more normal footing after nearly a decade of crisis-era stimulus. Higher interest rates put pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

"We are bearish on gold short-term into the Fed hike. There is good room to fallback to $1,200 within the next three months," said Dominic Schnider at UBS Wealth Management in Hong Kong. "The world economy is still in good shape, people are risk-on, inflation is leveling off, there is no real big inflation threat anymore, policy is normalizing still."

In the wider markets, global stocks hit a record high on Friday and Asian markets rose to their best levels in more than two years, while the dollar marked a one-week high against the yen.

So, gold market completes 100% of our expectations. Daily picture barely has changed since yesterday. Here the major concern stands around pennant. In fact, gold's destiny is deciding today. Breaking down will open road for medium-term bearish action, when gold could reach at least 1180 area.

So, today it will depend on whether price will be able to hold above 1255 area. Taking in consideration good ADP report and high expectations on NFP data, chances are not really big. On 4-hour chart our 3-drive pattern is almost completed. Here gold has completed the only chance where it was possible to combine 3-Drive completion and keeping of bullish sentiment:

Yesterday it was unclear what particular pattern gold will form to re-test trend line around 1255, but now we see that this is AB=CD pattern. Also we have ultimate butterfly target in this area. So, this will be, as I call it "culmination point". If you want to take long position - this is the best point to do it. Of course it doesn't guarantee you success, but it guaratees minimum risk. The major feature of "culmination points" is - it stands at the edge, at the invalidation point of bullish scenario. That's why we can place rather tight stop by using them.
Still, due NFP release today, it is difficult to rely on tight stop... anyway, today we probably will get the solution - what to expect from gold on next week: