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GOLD PRO Weekly, October 09-13, 2017

Discussion in 'Sive Morten- Currencies and Gold Video Analysis' started by Sive Morten, Oct 8, 2017.

  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Fundamentals

    (Reuters) - Gold bounced up from a two-month low on Friday, on concerns stoked by a Russian report
    that North Korea is preparing to test a long-range missile and on support from the U.S. dollar's shift into negative territory.

    "The Russian report of a looming North Korean missile test that could reach the west coast of the United States combined with a weakening dollar goosed gold from two-month lows," said Tai Wong, head of base and precious metals trading at BMO Capital Markets in New York.
    "Gold has slumped 7 percent over the past month, which is making speculative shorts wary at current levels so we may see $1,300 before $1,250."

    Spot gold rose 0.4 percent at $1,273.06 an ounce by 2:40 p.m. EDT (1840 GMT). U.S. December gold futures settled up 0.1 percent at $1,274.90. The dollar index fell from a 2-1/2-month high.

    "The dollar's initial gains evaporated as market participants made a more sober assessment of the jobs report and realized that the sharp rise in average hourly earnings may have been driven by a sizeable drop in low-paid and hurricane-hit jobs rather than an actual rise in earnings," said Fawad Razaqzada, technical analyst for Forex.com.
    "As the dollar fell, buck-denominated precious metals went up in value." Earlier, bullion fell to a two-month low at $1,260.16 an ounce on an upbeat reading of the U.S. unemployment rate and wage growth last month that supported expectations for a further U.S. interest rate hike in December. This pushed the dollar and Treasury yields higher.

    Gold prices have fallen 0.5 percent this week and are facing their fourth straight week of decline, the metal's longest run of weekly losses this year.

    Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares , have fallen 13.6 tonnes so far this week, their first weekly outflow in nine weeks and the largest since late July. Demand for physical gold in India improved slightly this week because of a correction in local prices, but restrictions
    on the industry and increased smuggling took the sheen off the bullion market.


    COT Report

    Within last month, 3-4 weeks, market shows typical changes for retracement. Net long position gradually drops together with open interest - speculators slowly close long positions. At the same time decreasing of longs is not significant. In general, this also could be technical off-load as net position stands near highs - 250K contracts and has to be reduced. Thus, CFTC mostly shows light bearish sentiment:
    upload_2017-10-8_12-49-39.

    Technical
    Monthly


    As September action, as October one stands inside the August by far. Trend is bullish on monthly chart, and changes come slow here.

    The one thing that may be will be useful for us in coming weeks is close standing of MACDP line. This could give us bullish grabber within October-November. All other things stand mostly the same as in previous weekly reports.

    On July and August we have tail close. Right now market has reached solid resistance area around 1330. It already has been tested once, but it is still valid. This is not just 3/8 major monthly Fib level. This is also Yearly Pivot Resistance 1 and 0.618 AB-CD target. Right now market still stands close to it.

    Next major target will stand around 50% Fib level and Agreement, as it coincides with AB=CD objective point as well. Market could take the shape of butterfly to get there. 1.27 extension also stands in the same area. But to keep this scenario valid price should not drop too deep. If gold will break 1205 lows, it will suggest deeper downside continuation as we already have "222" Sell pattern here:
    gold_m_09_10_17.

    Weekly

    So, Here we have two AB-CD patterns of different scale. First one is large monthly AB-CD that we've mentioned above and this is 0.618 target that has been hit at 1326$.

    Second AB-CD is a minor one and it stands inside CD leg of larger one.

    Recent price action around these two AB-CD's looks interesting and mostly it is bearish. Market has turned down a bit curiously, that is not typical for normal behavior. In fact, market has turned down after gap up and when as 1326 target as YPR1 were passed already. 1360$ area where market has turned down, actually, was a free space - no resistance above.

    Second moment - price has turned but not completed minor AB=CD. In fact, we've got "222" Sell pattern that we've mentioned above. "222" doesn't need necessary AB equal CD inside, it could be different and it still will be "222" pattern.

    Finally CD leg was faster and market was tending to CD target, but suddenly turned down. All these moments point on bearish nature of this action and this is not some fluctuations inside upside swing probably.

    So, as you can see our last week suggestion mostly was correct - price indeed has reached 1263 K-support area. At the same time market has completed here weekly harmonic swing of retracement. As 1263-1267 is rather strong weekly support area - some clear respect should be shown by price action. It means that we should be ready for upside reaction. New spiral of tensions around N. Korea and mystic D. Trump statements of "You'll find out" and "there is only one thing will work" with N. Korea makes investors worry on possible radical solution of this situation. And these statements appear right at the moment when gold has reached important support area.
    That's being said, as gold mostly has completed our destination point - now it is not good time to go short here. If you're bearish it would be better to wait for meaningful pullback:

    gold_w_09_10_17.

    Daily

    On Friday gold indeed has made minor spike, completed 1263 target and turned up. Here we could speak about upside reversal session. As we've estimated above - upside action should be significant here. Now we could talk about two possible levels. First one is obviously K-resistance area around 1293-1297. We probably could say that market should at least reach this area.

    Second one is area around MPP and daily OB. It stands around 1305. This probably will be ceil for coming week.

    At finally, another important issue to keep an eye on - "C" point of our AB-CD. Since we treat possible upside action as "retracement", theoretically price should stay below "C". Otherwise, AB-CD pattern will be erased. This will point on possible higher upside action, at least to 1320 area and later could give us larger downside AB-CD. But, on coming week let's focus just on two mentioned levels, this should be enough.
    gold_d_09_10_17.

    Intraday

    So, market perfectly has completed butterfly "Buy" pattern that we've discussed on Friday. Now there are two ways how we could take position if we've missed opportunity with butterfly entry. First one is (as we've said previously) - waiting for upside breakout of the channel, forming of upside reversal swing and then wait for retracement down, may be re-testing of broken channel:
    gold_4h_09_10_17.

    Second is, try to use hourly chart. Nearest resistance, according to 4-hour picture stands around 1280 - this is Fib level and channel's line. Hence, market could move slightly higher (~4$) and then minor retracement could start. You could use it for entry:
    gold_1h_09_10_17.

    Currently, drop below 1260 will be irrational for bullish setup as all targets have been met there. If somehow price still will break it - forget about long trades, this will totally erase bullish scenario. In fact, recent lows is invalidation point for bullish setup that we have right now.


    Conclusion

    As monthly/weekly trend stands bullish and downside action has no signs of collapse, we treat this action as retracement by far.

    In shorter-term perspective, gold has met our major 1260 target and already has formed bullish reversal pattern. Thus, we mostly suggest bullish scenario for 1-2 weeks on gold. If you're bearish, it would be better to wait for some pullback for better entry levels. As gold market stands at weekly support this is not friendly moment to go short...


    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.
     
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  2. Rabul

    Rabul Private

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    Is it still possible gold will close the gap around 1340 and then drop again?
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Well, currently I do not see clear signs that this definitely will happen. Everything is possible, of course, but... I prefer to go step by step. Currently we treat this action just as retracement.
     
  4. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices inched up to their highest in more than a week on Tuesday, drawing support from geopolitical tensions and a softer dollar, but expectations of another U.S. Federal Reserve interest rate hike this year weighed on upside momentum.

    Spot gold was up 0.2 percent to $1,286.86 an ounce by 0339 GMT, after earlier in the session touching its best since late September at $1288.19. U.S. gold futures for December delivery climbed 0.3 percent to $1,289.30 per ounce.

    Geopolitical tensions and uncertainty around what U.S. President Trump might do about North Korea kept a certain degree of risk aversion alive in markets, and that was providing temporary support to gold prices, said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

    A softer dollar on Tuesday was also lending support but growing expectations that the Fed would raise interest rates again this year checked gold's gains. Federal funds futures showed traders were pricing in a
    nearly 90 percent chance of a U.S. interest rate hike in December.

    Higher interest rates tend to boost the dollar and weigh on the greenback-denominated gold. "Most of the central banks are going to tighten or have renormalisation of monetary policy in the post-financial-tsunami
    era. This point is really restraining the upside for gold prices. I think $1,300 should be a resistance level," To said.

    The European Central Bank should reduce its asset buys from next year with the aim of ending them altogether, the bank's executive board member Sabine Lautenschlaeger said on Monday, just weeks before policymakers decide whether to curb stimulus.

    "We still reiterate our view ... that the precious metal will likely remain under pressure over the short-term, as we see a firmer dollar, resilient equity markets, rising interest rates and slightly more quieter geopolitical conditions, all combining to keep serious rallies in check," INTL FCStone analyst Edward Meir said in a note.

    Reuters technical analyst Wang Tao sees spot gold still targeting $1,299 per ounce, as it has broken a resistance at $1,281.


    So gold market has started well on Monday and mostly stands in a row with our weekly analysis. On daily chart we still watch for 2 levels. First is 1295 - K-resistance, second - 1305 area. Hardly price will exceed it as 1305 is also daily OB area:
    gold_d_10_10_17.

    At the same time, action on Monday was a bit stronger that we've suggested. And those who has missed chance to go long on Friday's butterfly, also hasn't got chance to go long on Monday. As you can see, level that we've suggested for retracement has been broken without respect.
    Still, starting N. Korea momentum starts to exhaust and within 1-2 sessions probably retracement should happen:
    gold_4h_10_10_17.

    On hourly chart price has formed bearish butterfly. Here we will watch for 2 levels - first is K-support and next one is 1270 Fib level. As we're dealing with first bullish swing - retracement down probably will be deep. Besides, 1270 is a border of broken 4h channel as well, so, it could re-tested:
    gold_1h_10_10_17.

    This should give us chance to take long position...
     
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  5. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold stood little changed on Wednesday after the dollar recouped early losses, with investors awaiting the release of the U.S. Federal Reserve's minutes from its September meeting for clues on further interest rate hikes this year.

    Spot gold was unchanged at $1,287.70 an ounce by 0409 GMT. It touched its highest level since Sept. 27 in the previous session. U.S. gold futures for December delivery eased 0.3 percent to $1,290 per ounce.

    "Some money is just coming off the table ahead of the FOMC minutes and its just a bit of risk on. It just feels a little bit of heavier (for gold) with what's going on with the dollar in Asia," a Hong Kong-based trader said.
    "It's probably going to be in $1280-1300 range for the moment."

    Asian shares rose on Wednesday, tracking Wall Street's rally to all-time highs, and the dollar pared early losses ahead of the release of the minutes from the Fed's September policy meeting later in the day, with a buoyant euro keeping a check on its gains.

    Markets are widely expecting the U.S. central bank to raise rates in December, for a third time this year.
    Gold is highly sensitive to rising interest rates, as these increase the opportunity cost of holding non-yielding bullion, while boosting the dollar in which the metal is priced.

    "$1,300 is a very psychological level for gold. We really need to peck on through that to see some more buying. We're just going to be waiting for the FOMC minutes and run into a bit of profit taking for the time being," the trader added.

    Spot gold may retrace to a support at $1,281 per ounce before resuming its rally towards a resistance at $1,299, Reuters technical analyst Wang Tao said.


    So, gold market shows some strength as price has reached 1293 daily K-resistance directly, with ignoring any resistance levels on intraday charts. That's why, we haven't got our retracement for position taking. Right now, finally it should happen:
    gold_d_10_10_17.

    Now it makes sense to take a look at support areas. It seems that most logical destination point of retracement is 1280 area. First is, this is K-support, second - natural support/resistance area that gold has tested recently few times.
    As price has formed bullish reversal swing, expecting of deeper retracement right now is normal.
    gold_1h_10_10_17.
     
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  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold prices rose to their highest in two weeks on Thursday amid a muted dollar, after minutes from the U.S. Federal Reserve's September policy meeting revealed low inflation concerns.

    Spot gold was up 0.2 percent at $1,294.29 an ounce by 0338 GMT, after earlier marking its best since Sept. 27 at $1295.45. U.S. gold futures for December delivery climbed 0.6 percent to $1,296.50 per ounce.

    "Gold prices rose slightly as the market appeared to take the Fed minutes as slightly dovish. In particular, it was the comments on persistently low inflation that seemed to gain much attention. This saw the US dollar weaken slightly, increasing investor appetite for the precious metal," ANZ analysts said in a note.

    Fed policymakers had a prolonged debate about the prospects of a pickup in inflation and slowing the path of future interest rate rises if it did not, according to the minutes of the U.S. central bank's last policy meeting on Sept. 19-20 released on Wednesday.

    The dollar hit a fresh over two-week low on Thursday following the news. Several policymakers said they would focus on upcoming inflation data over the next few months when deciding on the central bank's future rate hike path. U.S. short-term interest rate futures were steady on Wednesday as traders stuck to their bets on a possible U.S. rate hike in December. Gold is highly sensitive to rising interest rates, as these tend to boost the dollar, the currency in which the metal is priced.

    "Investors' concerns over escalating tensions between U.S. and North Korea remain high," ANZ analysts noted. Trump has "lit the wick of war" with North Korea and his country will be made to pay with "a hail of fire", a Russian news agency quoted North Korea's foreign minister as saying on Wednesday.

    If people are not too worried about the Fed's policy, we have North Korea. Surely, geopolitical tensions are supporting prices ... we may try $1,300 next week, said Yuichi Ikemizu, Tokyo branch manager at CIBC Standard Bank.

    Spot gold may test resistance at $1,299 per ounce, with a good chance of breaking above this level and rising more towards the next resistance at $1,305, Reuters technicals analyst Wang Tao said.


    Gold price is still coiling inside of our daily K-resistance area. Now is a big question whether price will turn down again, because on FX market there are some risks that could lead, say EUR, to new top. It will depend on how market will response to our major area. The same is on gold.
    The major difference, though, is market expects 1300 area from gold. That's why, may be downside action could start after it will be tested:
    gold_d_12_10_17.

    On hourly chart we do not have big choice of potential reversal setups. Only H&S probably. Recently market just has shown minor AB-CD retracement to 1285 and has not reached our K-support. That's why, there are big chances that gold will go to 1300 and 1.618 extension of this AB-CD retracement. This, in turn, could become a background for hourly H&S pattern:
    gold_1h_12_10_17.

    Right now we do not see here good chances for trading as no patterns have been formed yet. To go long is too late as price stands at K-resistance on daily chart, while to go short is a bit early as no bearish reversal patterns have been formed...
     
  7. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Good morning,

    (Reuters) - Gold rose for a sixth day on Friday, buoyed by a weaker dollar, with investors waiting for key U.S.
    inflation data for clues on the outlook for potential hikes in U.S. interest rates. Spot gold was up 0.3 percent at $1,297.06 an ounce, as of 0657 GMT, after earlier marking its highest since Sept. 26.

    The metal was on track to post its first weekly gain in five. U.S. gold futures for December delivery gained 0.2 percent at $1,299.30 per ounce.

    "We remain somewhat cautious on gold here, as we think the complex will have some difficulty moving higher as we approach both the ECB meeting and the Fed rate increase slated for year-end," INTL FCStone analyst Edward Meir said in a note.

    "Having said that, with the political situation in Washington looking messy and potentially bearish for the dollar ... the precious metal could see an element of support materialising as well."

    The dollar slipped on Friday, on track for weekly losses as investors awaited the U.S. inflation data to gauge the likelihood that the Federal Reserve will stick to its plan to raise interest rates again this year. The greenback hit an over two-week low against a basket of currencies in the previous session after minutes from the Fed's September meeting showed the central bank was concerned over low inflation.

    Hurdles in U.S. tax and healthcare reforms had also recently pressured the currency. However, data on Thursday showed U.S. producer prices rose in September, suggesting signs of underlying strength in both
    wholesale inflation and the labour market, potentially leaving the Fed on track to raise interest rates again in December.

    Markets were pricing in a nearly 90 percent chance of a December rate hike, according to CME Group's FedWatch tool. Gold is highly sensitive to rising rates, as these tend to boost the dollar, putting pressure on the greenback-denominated asset.

    Elsewhere, European Central Bank Chief Mario Draghi defended a pledge to keep interest rates at rock bottom on Thursday, while Bank of Japan's Haruhiko Kuroda stressed the central bank's resolve to maintain its ultra-loose monetary policy.

    "Draghi's phrasing could have provided gold with support as well, as it showed that not all central banks are moving at the same speed towards tightening policy and some(like the BoJ) have no intention at all."



    Well, today we're mostly interested in hourly chart as we've got some more clarity there. On daily picture situation looks mostly the same as price is coiling inside K-support :
    gold_d_13_10_17.

    On hourly chart market is forming potentially reversal pattern, or combination of patterns. First is bearish wedge is forming. Inside the wedge we have 3-Drive "Sell" pattern and butterfly as finalizing pattern.
    This pattern shows reversal point right at 1300 level. Currently it is difficult to say whether this will lead to significant drop, but some minor bearish reaction, especially before weekend is possible:
    gold_1h_13_10_17.
     

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