GOLD PRO WEEKLY, November 14-18, 2016

[Sive Morten]

Fundamentals


(Reuters) Gold prices tumbled 3 percent to a five-month low on Friday, hit by a broad selloff in commodities as well as surging bond yields on speculation a splurge of U.S. infrastructure spending could stoke inflation.

Spot gold was down 3 percent at $1,222.38 an ounce by 3:04 p.m. EST (2004 GMT) after touching a session low of $1,219.40, the weakest since June 3. The selloff put gold on track for its poorest weekly performance since June 2013, even after it rallied nearly 5 percent on Wednesday when results showed Republican Donald Trump was the U.S. president-elect.

U.S. gold futures settled down 3.3 percent at $1,224.30. Spot silver slid 6.5 percent to $17.34 an ounce,
after tapping the weakest since Oct. 7 at $17.15. Platinum dropped 3.4 percent to $939.24, after touching $929.75, the lowest since Oct. 24. "There's a broad-based commodity selloff. Copper and nickel are getting hit and it has spilled over into precious," a European trader said. Gold was already slightly weaker before base metals reversed and went into negative territory after a sizzling rally, while oil extended losses.

"We're seeing a complete reassessment of various asset classes following the Trump win earlier this week. The combination of rising real yields and the stronger dollar is really hurting sentiment in gold," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. The dollar was on course for its best week in a year.

The market is also betting on the Federal Reserve raising interest rates more quickly. 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 it is priced.

Fed Vice Chair Stanley Fischer said on Friday that U.S. economic growth prospects appear strong enough for the Fed to proceed with a gradual increase in interest rates. "Funds had increased their net longs to a huge degree over the last two weeks. That put the market in the situation where, if we started to come under some pressure and you got through some technical levels, you could see some selling," said Bill O'Neill, co-founder of LOGIC Advisors.

"There was such a misinterpretation about what would happen if Trump was elected. (His speech) totally disarmed those trying to promote the idea it's going to be chaos." Palladium shed 2.4 percent at $671.98, after rising to its highest since Oct. 5 at $697.90 earlier.

COT Report

Last week there was no release of CFTC data, so we do not know yet how market has reacted on recent drop. Probably we will get it next week. Most recent information that we have shows normal bullish sentiment - growing of speculative long position and open interest. But we suspect that situation has changed...

Technicals
Monthly

As COT report mostly has completed its role and predicted first drop, now we again should pay more attention to technical picture, to estimate destination point of current bearish action on long-term analysis.

Monthly picture currently supports our suggestion on deep retracement, this is just how markets work. Sooner or later but this retracement should have happened and now it stands underway.

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. 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. Price has formed nice bearish engulfing right around this area and now gold is following to its signal

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... Currently we could only gamble what event could push gold as low as 1160 again, but probably something will happen.

Our suggestion on initial drop was correct - growing psychological pressure among managers of Hedge and Mutual funds, good performance of gold in 2016, coming rate hike in Dec and overloading long positions forced traders to fix profit as soon as gold has dropped below 1300 area.

That's being said, taking together technical, fundamental and sentiment picture we suggest further drop on gold, at least to 1160-1180 area. Second step is watch for validity of H&S pattern. If it really will work (and we think that it should), then we expect new long-term bullish trend on gold market that should lead to new highs on 2000$+ levels. It means that 1160-1200 area should be treated as strategical point for long entry.

Now market comes closer to MACDP line, so it would be perfect if gold will reach our predefined level and simultaneously form bullish monthly grabber... Let's watch for it...

Weekly

So our weekly setup was completed precisely has we've suggested. First step is upside bounce as reaction on strong K-support area and "Stretch" pattern. Second step - downward reversal and re-establishing of bear trend. Upside reaction was a bit stronger - 1350 area, while we've mostly expected 1295 area but this reaction was very short-term and upside overextension was due election rush. But right now everything turns to normal behavior.

As our retracement already has been completed, now its time to think about downside shape. First of all take a look at nasty last week candle. This is reversal candle that engulfs whole previous month actually. Within just one week gold has broken weekly K-support area. So, picture is clearly bearish. Now the question is what shape we will get. Initially we thought on H&S pattern here and now we can recognize it shape, but it looks a bit different. Initially we've expected drop to 1200 first and upside retracement to 1300 area second - as right shoulder should be formed.
But this spike to 1350 - how we should treat it? Is it a right shoulder aleardy, or, this is just a slope of the head and shoulder still will come? I do not know definitely. But my view - H&S is in place and market will continue dropping. This opinion mostly is based on combination of monthly and weekly picture. Gold stands just 60 bucks higher than our monthly support. This is not really big distance. If we suggest that another right shoulder should happen - then on monthly chart we should get 1-2 candles of upside action, but it looks not quite logical on monthly chart, especially if we will get grabber. Besides, major K-support already has been broken down...

So, although this is our view on current situation, but still, let's watch what will happen around 1200 area. This is where neckline of our "initial" pattern should be. And within couple of weeks it will be clear should we get another shoulder or not.

Daily

Picture on daily chart we also hardly could call as bullish one. Recent plunge looks impressive. Here BTW we could see clear difference in nature of upside action and downward. If upside run was more smooth and gradual, drop down is very fast. This moment tells what kind of trend stands right now on daily gold.

The fact that price drops below MPS1 also tells about exisence of bear trend. Although trend is bearish, but currently is not good moment for taking short position. Market is strongly oversold and has not reached yet important target. That's why it seems that it would be better to wait, while market will reach support area and show upside bounce before taking short position. This probably should happen around 1200-1210 area, that includes 50% Fib level and AB=CD target.

Still, as we can see CD drop was very fast and usually it leads to further downward continuation to some more extended targets as soon as upside retracement will be completed. Thus, 1200 area, probably will be not the final point of the drop.

4-hour

On intraday charts, guys, currently we do not see a lot of chances for trading. The common rule right now that we should follow probably is to take trades in a direction of daily action. That's why, let's take a look this setup. It would be nice if we will get B&B "Sell" here.

At first glance thrust down was interrupted by retracement but this retracement has not reached 3/8 Fib level, that's why we could treat it as whole thrust down and it is suitable for B&B trade. Currently market stands at daily oversold and hit AB=CD target (although I do not really like this AB-CD, by the same reason BC leg is less than 3/8. But this is the only AB-CD that we have here). So, may be minor bounce will happen to WPP, and 1264 resistance. In this case we could get B&B "Sell" pattern that will stand in the same direction as major trend right now.

Conclusion:
Perspective of 1-3 months looks bearish. We mostly are watching for reverse H&S pattern on monthly chart that should provide us strategical entry point around 1160-1180 level.
Perspective of 1-2 years looks bullish. As H&S pattern will be completed, new bullish trend should start. We expect to see gold on areas above 2000$

Current action tells that our analysis was correct, although upside retracement was a bit greater than we've expected due election's rush. Right now gold shows strong signs of downward action and it seems that our long-term target should be reached. Right now it is better to take scalp trades that stand in the same direciton as a major tendency.


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.

 

[invest6300]

I understand that COT you can also get early fir figures you did not have from:. Go to barchartdomcom, Go to futures. Go to Commitments Of Traders. Click on gold. In the legacy format, (upper) commercials includes swap dealers (who trade physical gold). In the disaggregated report (lower, newer format), swap dealers are separated from the commercials. Scan your mouse over the last futures on the right of the graph and it shows up as a popup. Other places like gold seek haven't posted it yet. This chart/site seems to update on Mondays. Can you up date on lates as it is

 

[Sive Morten]

Good morning,

(Reuters) Gold prices edged higher on Tuesday as investors snapped up bars and coins in a wave of physical buying after the metal dropped to its lowest level in nearly six months in the previous session.

Spot gold was up 0.4 percent at $1,224.46 an ounce at 0554 GMT. The metal had slipped to its lowest since June 3 at $1,211.08 an ounce on Monday. U.S. gold futures climbed 0.2 percent to $1,224.30.

Demand from China buoyed prices during Asian trade, said MKS PAMP Group trader Sam Laughlin.
"Support for the metal sits broadly around $1,210, while below this, the late May low around $1,200 should see strong (buying) interest."

The metal has fallen nearly 9 percent from a Nov. 9 high of $1,337.40 per ounce after Donald Trump's election as U.S. president, hurt by a stronger U.S. dollar and surging Treasury yields as investors bet fiscal and trade policies under his administration will stoke inflation. The dollar index slipped 0.17 percent at 99.938, but remained well within reach of its December 2015 peak of 100.51.

"It seems like Trump's increased spending will increase inflation expectations, on the back of which the U.S. dollar has risen strongly" said NAB analyst Vyanne Lai. "(Market) sentiment is being compounded by the very high probability of the U.S. Fed raising interest rates in December."

Dallas Fed President Robert Kaplan on Monday suggested the U.S. central bank is on track to raise rates soon. 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 it is priced.

Spot gold may test resistance at $1,235 per ounce, as it has found a support zone of $1,204-$1,210, according to Reuters technical analyst Wang Tao.

On gold market situation mostly stands the same, gold continues action down that agrees with our analysis. RIght now price stands at daily oversold and 1210$ - 50% Fib support level, but gold has not completed AB=CD pattern that has target at 1200. That's why, if even some upside bounce will happen, it will be probably not extended, and then downward action should continue:

4-hour chart shows that 1250 area is most probable destination of retracement. This is former lows on daily chart and also K-area and WPP. Here we will continue to watch for DRPO "Buy" pattern that we've talked about in our weekly research. Still, we do not call you to trade it, since this is really risky to go against such plunge as we see on daily chart. Only if you feel confidence and you have experience of such trades, you could try. For others, who trades on daily chart it would be better just to wait bounce up and then look for chances to go short:

 

[Sive Morten]

Good morning,

(Reuters) Gold prices on Wednesday held gains made in the previous session as the U.S. dollar weakened, but lacked impetus to push higher on increased odds of an interest rate hike by the Federal Reserve. Spot gold was up 0.14 percent at $1,229.36 an ounce at 0610 GMT, after rising 0.67 percent in the previous session. U.S. gold futures rose 0.41 percent to $1,229.50.

"At this moment there is some kind of rebound but $1,230 should be the immediate resistance level that it should not cross with a very high momentum," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. "$1,215 to $1,250 should be the trading range just to allow some time for people to think and reflect on the possibilities of policy options for the President-elect."

Trump's election to the U.S. presidency sent bond yields surging to 2016 highs this week, pushing the U.S. dollar to an 11-month peak against a basket of major currencies on Tuesday, as investors bet his administration's policies would stoke inflation.

On Wednesday, the dollar index, which measures the greenback against a basket of major currencies, slipped back 0.26 percent at 99.965. "A slightly weaker U.S. dollar also helped improve investor sentiment," ANZ analysts said in a note. However, the dollar still held near its 11-month high hit, though, after upbeat U.S. data gave the greenback fresh impetus.

Stronger-than-expected U.S. retail sales data in October pointed to sustained economic strength that could allow the Federal Reserve to raise interest rates next month.

Fed Governor Daniel Tarullo on Tuesday said Trump's election already may be pushing up interest rates and tightening financial markets, something the Fed will have to monitor as it decides how quickly to tighten monetary policy.

"With Fed officials' recent comments, talk of a rate rise will hardly inspire gold to go higher," said James Steel, chief metals analyst for HSBC Securities. Gold is highly sensitive to interest rates. Spot gold may test a resistance at $1,235 per ounce, a break above which could lead to a further gain to the next resistance at $1,249, according to Reuters technical analyst Wang Tao.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 percent to 927.45 tonnes on Tuesday from 928.93 tonnes on Monday.

On daily chart picture mostly stands the same - gold has reached major 50% support at 1210 level and oversold. Most important detail here is AB=CD pattern, and gold has not quite completed its target:

So, on daily chart combination of very fast drop of CD leg and it's uncompleted target significantly increases chances on downward contination at least 1200 area in short-term. So current bounce is mostly doomed.

The same we see on 4-hour chart. Gold is forming bearish pennant and action inside of it very choppy, so we do not see any signs of possible deep upside retracement:

That's why our short-term plan - do not take any long positions, wait for completion of daily AB=CD around 1200 and only after that we could watch what will happen, what patterns will be formed around etc...

 

[Sive Morten]

Good morning,

(Reuters) Gold steadied on Thursday as a rally in the U.S. dollar showed signs of fatigue after the currency hit its highest in nearly 14 years against a basket of currencies the day before.
Spot gold was up 0.1 percent at $1,226.26 an ounce at 0455 GMT, after dropping 0.25 percent in the previous session. U.S. gold futures rose 0.15 percent to $1,225.70 an ounce.

The dollar index, which measures the greenback against a basket of major currencies, slipped 0.13 percent to 100.280, as moderate U.S. inflation data drove a flattening of the U.S. Treasury yield curve. The index climbed to 100.57 on Wednesday, which was its highest since April 2003, after a week-long rally mainly driven by the post-election surge in U.S. bond yields as traders bet President-elect Donald Trump's administration will adopt inflationary policies.

"The dollar was higher and gold was sold. Now, the dollar has given away gains and gold is steady," said Yuichi Ikemizu, head of commodity trading at Standard Bank in Tokyo. "It has found a bottom around $1,220 and looks firm." "We need something for gold to follow. At this moment there is nothing supporting movement and investors are sidelined," Ikemizu added.

Philadelphia Fed President Patrick Harker said he favoured raising interest rates and that the U.S. central bank might have to hike more aggressively if the Trump administration enacts fiscal stimulus. St. Louis Fed President James Bullard said on Wednesday that the Fed would hike U.S. interest rates in December barring any major shocks.

Financial markets expect the Fed to hike rates next month and have begun pricing in a much more aggressive run of rate increases after Trump promised to boost the U.S. economy with spending on infrastructure. "Since the gold market has absorbed the likelihood of a December rate rise, we do not think Mr. Bullard's rate comments were especially price-negative," said James Steel, chief metals analyst for HSBC Securities.

Fed Chair Janet Yellen's congressional testimony is due later in the day and will be watched closely for cues on the economic outlook and rate increases. Gold is highly sensitive to interest rates. Spot gold has failed to break resistance at $1,235 per ounce and may consolidate below this level, which is above
support at $1,210 for one or more days, according to Reuters technical analyst Wang Tao.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.13 percent to 926.26 tonnes on Wednesday.

So, gold market mostly stands in the same area. Yesterday we've come to 2 major conclusions. First is - minor upside bounce could happen, as price has reached oversold and Fib level. Second - retracement will be small, since gold has not completed yet AB=CD pattern around 1200 area:

On 4-hour chart we haven't got as DRPO as B&B pattern. All that we have is just bearish pennant. It could happen, that gold will stand in flat action for some time and then drop to daily AB=CD, as I've drawn here, say, in shape of butterfly:

It means - for daily traders do not go long, use any rally that will happen as opportunity for short entry, but not for bullish trade. For scalp traders - it is possible to go long, but after daily AB-CD pattern will be completed and some intraday bullish reversal pattern will be formed.

 

[Sive Morten]

Good morning,

(Reuters) Gold dropped to a 5-1/2-month low on Friday and was set for a second week of declines, as the dollar soared after comments from the Federal Reserve bolstered expectations that U.S. interest rates would rise next month.

Spot gold was down 0.6 percent at $1,209.00 an ounce by 0501 GMT. Earlier in the session, it reached $1,204.99, its lowest level since May 30.

U.S. gold futures dipped 0.7 pct to $1208.4 an ounce, after shedding nearly 1 percent earlier in the day.
The dollar index rose to its highest since April 2003 and was set for its biggest weekly gain in a year after Fed Chair Janet Yellen provided a strong signal that U.S. interest rates would likely increase by year-end.

"Yellen's comments and a stronger dollar have pulled down the entire precious metals complex. Gold will be on a downtrend for now," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central.

"People are speculating that Donald Trump's policies will improve companies and equity markets, and lots of them are going to stocks and currencies. Gold has lost a bit of its safe-haven asset status."

Bullion has dropped nearly 10 percent from a high of $1,337.40 per ounce, hit on Nov. 9, when Donald Trump was announced U.S. president-elect. The election of Donald Trump as U.S. president has done
nothing to change the Fed's plans for a rate increase "relatively soon", Yellen said on Thursday in Congressional testimony.

Gold is highly sensitive to interest rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. "The gold market seems to be fully ccommodating a rate rise in December," HSBC analyst James Steel said in a note.

"Gold prices are down sharply... This should help encourage emerging markets' demand. We expect this to cushion - but not necessarily reverse - the latest drop in prices.

" Spot gold may drop towards $1,172 per ounce, as it has broken support at $1,210, according to Reuters technical analyst Wang Tao.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.61 percent to 920.63 tonnes on Thursday. Holdings have decreased 2.33 percent so far this month.

So guys, Gold market has hit our weekly target - 1202$ AB=CD objective point. All that we've said on poor reliablity of puny retracement was true. Conclusion here is very simple. If gold will show upside retracement, most probable it will be to 1250 area, hardly higher, then we will try to use it for selling:

On 4-hour chart, butterfly has been formed, may be it will shift to H&S. In this case it's target wil stand precisely at 1250 area:

Still, as on FX as here we call you to ignore bullish intraday setups and do not trade them, since it's very risky right now. If they will work still, it is better to use it for short entry...