GOLD PRO Weekly April 20-24, 2015

[Sive Morten]

Fundamentals

Weekly Gold Tading Report prepared by Sive Morten exclusively for ForexPeaceArmy.com

As Reuters reports Gold pared gains on Friday, heading for a second weekly drop, after data showing U.S. consumer prices rose in March tempered speculation the Federal Reserve will delay its first interest rate rise in nearly a decade.

The metal held above the $1,200 an ounce level, however, which it broke above earlier this week after a run of downbeat U.S. data led analysts to reassess expectations the Fed would raise rates in June.

The dollar turned positive after U.S. inflation data.

"Still seems very much (like) range bound trading in the days ahead," said Steve Scacalossi, Director and Head of Sales for Global Metals at TD Securities in New York, in a note.

"Some attention is now focused on the end of April for some guidance from the next FOMC meeting on 29th April.

Gold is sensitive to U.S. monetary policy, as rising rates would boost the dollar, in which the metal is priced, while lifting the opportunity cost of holding non-yielding bullion.

"Even if the rate rise gets pushed back, people still see rates rising, and we believe that's still a negative for gold," Julius Baer commodity analyst Warren Kreyzig said.

"The delay may give gold a reprieve, but in the long term we think it will still go down."

Adding to the rates uncertainty were comments from Fed officials on Thursday that showed officials at odds over the timing of a move.

"Expectation once again is for rate rises to be pushed out even later. September or October has been our base assumption for some time, but I've heard talk in the last couple of days of rate rises being pushed out to 2016," Mitsubishi analyst Jonathan Butler said. "That's all positive for gold."

Physical buying in the world's top two gold-consuming countries remained slow this week. Premiums in China improved only slightly and those in India slipped as prices stabilized at $1,200 an ounce.

Recent CFTC data barely has changed. We see shy growth in open interest and long positions. But it will be more correct to call it as flat. Sentiment has not changed and investors still do not take bet on upward action. Shorts were closed but no corresponding longs were opened. At the same time recent data does not encourage much to take new shorts since recent data from US is not as strong as it was expected. That’s why short positions also stands mostly flat.

Here is detailed breakdown of speculative positions:
Open interest:

Shorts:

Longs:

Summary:

Technicals
Monthly
There is really shy difference in close price from previous week. On long-term horizon we still have last big pattern in progress that is Volatility breakout (VOB). It suggests at least 0.618 AB-CD down. And this target is 1050$. At the same time we need 1130 breakout to start clearly speak on 1050 target.
In the beginning of the year market showed solid upside action. Gold was able to exceed yearly pivot, passed half way to Yearly Pivot resistance 1 but right now has reversed down and closed below YPP. From technical point of view this is bearish sign. This could be very significant moment and next logical destination will be yearly pivot support 1 around 1083$.
Recent US economy data mostly was positive but not as strong as investors have expected. Many investors concern about anemic wage growth, although in recent time this indicator shows improving. So, it seems that gold will remain hostage of dollar value and US economical data (mostly inflation) in nearest perspective. Approximately the same was announced by Fed in forecast on inflation and had become a reason of dovish approach to rate hiking. Another concern right now is too strong dollar that becomes a problem per se for economy growth and kills inflation. Prices are fallen so no needs to hike rates.
Still, if we will take into consideration geopolitical situation and risks that have appeared recently, it could happen that situation will change, especially if situation in Ukraine will escalate and peaceful regulation will fail. Day by day we see worrying geopolitical news.
That’s being said, economical data in general still supports further gold decreasing in long term but geopolicy could bring significant adjustment. Unfortunately the geopolicy is sphere where we can’t do much. As gold has passed through 1200, our next destination point is previous lows at 1130, but since gold is returning to them again – this is temporal destination and we should prepare for further downward action. Besides, right now we can clear recognized bearish dynamic pressure on monthly chart. Take a look, although trend has turned bullish, but market was unable to show more or less meaningful upside action. Right now we see the tendency of lower highs creation and this significantly increases chances on downward breakout.

Weekly
Weekly chart also works “on perspective” since all patterns that we have here mostly are bearish. If you will take a look at weekly chart closely you will find a lot of different targets – AB-CD’s, couple of butterflies etc. By the way, most recent action also could turn to butterfly… and all of them have targets below current level.
Previously we’ve expected the reaction on poor NFP data but reaction mostly was mild. If even market will continue move up somehow until it will hold below 1313 top – bearish sentiment will be valid, because monthly bearish dynamic pressure will be valid and market will keep chance on forming butterfly. Only if market will move above 1313 top – it will break tendency of lower highs and put under question further downward action.
This looks not very possible right now, by having such CFTC data on the back and since we’ve got bearish grabber on weekly. That’s the pattern that could trigger downward continuation. At least we could stick with its range for trading. It suggests taking out of former lows and could lead market simultaneously to AB=CD and butterfly destination points. This confirms that return back to 1130 area will be temporal even and just preparation for further drop. Last week action was not very impressive, trend even has turned bullish, but still this action was mostly down and grabber still valid. It means that currently we have no sense to change trading plan since our context is still valid. To destroy this setup gold needs at least erase the grabber.
All other targets stand significantly lower – 1080, 1050 and even 990$.

Daily
Price has little changed since Friday and all that we’ve said in update is still valid. Mostly guys, as sentiment data was not changing for considerable time, it seems, that investors mostly wait for Fed on 28-29th of April. Hardly any strong action will happen in nearest week, only if we will get some breaking news either economical or geopolitical. If instead everything will be as usual – market probably will stay quiet for couple of weeks.
Recently we’ve estimated that 1210-1212 area is acceptable ceil for normal bearish market. Any action above this level will break short-term bearish sentiment and open road for further upside development. Currently this level still holds. Daily picture shows opposite patterns – bearish grabber and signs of bullish dynamic pressure. Both of them suggest opposite action. At the same time – grabber still valid and keeps recent action. If market will pass through 1175 lows – this will be significant impact for bulls and gold could shows downward acceleration. But may be market will remain in this range till Fed meeting. Anyway, currently we have pattern in place and will work with it until its target will be completed or pattern will fail.

1-hour
As we mostly have no patterns expect daily grabber, let see what could happen. 1210 area is top around WPP and in fact invalidation of daily grabber. At the same time we could recognize the shape of H&S Pattern that conversely suggests upside action and it’s invalidation point will stand at 1194 lows. If market will return back below right shoulder then H&S mostly will fail.
Recent action does not exclude change of appearing upside butterfly if bullish position will take the lead. As a result we could act differently. Thus, if you want to take short position – currently probably is not bad area where you can do this, since market stands very close to invalidation point and risk is small. Conversely you could wait for breakout - either upside or downside. This will be safer but entry point probably will be worse. But to be honest guys, overall short-term setup on gold is not very fascinating, especially if we will take into consideration recent lazy and choppy action.

Conclusion:
Long-term picture remains bearish and major patterns stand intact. CFTC and SDPR data does not show on some drastical shifts in sentiment. Thus, upward action has blur perspective and reliability. As weekly chart has given us bearish grabber, we mostly should prepare for taking short position. At the same time recent data was soft and investors have taken more balanced position and mostly wait for some driving factor that finally could clarify situation and at least short-term direction.

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]

Gold Daily Update Tue 21, April 2015

Good morning,


Recent Reuters news tell Gold steadied below $1,200 an ounce on Tuesday after its biggest one-day drop in a week, remaining under pressure as the dollar rose and a rally in global equities diverted interest from the precious metal.

European stocks rose nearly 1 percent following a strong session in Asia, with a raft of positive corporate earnings pushing equities higher, and after China's latest step to prop up its faltering economy lifted global equities.

Gold steadied below $1,200 an ounce on Tuesday after its biggest one-day drop in a week, remaining under pressure as the dollar rose and a rally in global equities diverted interest from the precious metal.

European stocks rose nearly 1 percent following a strong session in Asia, with a raft of positive corporate earnings pushing equities higher, and after China's latest step to prop up its faltering economy lifted global equities.

Spot gold was at $1,196.83 an ounce at 0943 GMT, little changed from late on Monday, when it fell 0.7 percent. U.S. gold futures for June delivery were up $3.00 an ounce at $1,196.70.

"Gold was being weighed down yesterday by the firmer dollar and the rising equity markets, and these two factors are preventing gold from regaining the $1,200 mark this morning," Commerzbank analyst Daniel Briesemann said.

"The directionless trading that we're currently seeing will probably continue for the time being," he said. "I don't see the move below $1,200 triggering anything more spectacular."

Upbeat European earnings reports helped lift world stocks back towards all-time highs, offsetting worries about a possible Greek default. Worries about Greece pressured the euro, however.

The single currency fell 0.5 percent against the dollar, piling pressure on gold, which is priced in the U.S. unit.

Gold prices have been weighed down this year by expectations that the Federal Reserve is preparing to hike interest rates for the first time in nearly a decade.

That would boost the dollar and lift the opportunity cost of holding non-yielding gold. Until further clarity is received on the outlook for U.S. rates, gold will likely struggle for direction, analysts said.

"Overall uncertainty on the timing and pace of Fed tightening adds to investors' reluctance to put on sizeable positions at this point," UBS said in a note on Tuesday.

Physical demand in China, the second largest gold consumer, was lacklustre overnight, traders said, with precious metals house MKS reporting "low turnover and modest price action" in Asian trading hours.

Traders were also watching physical demand in top consumer India, which celebrates the Akshaya Tritiya festival, considered one of the most auspicious days to buy gold, on Tuesday.

Supply of the metal into India rose sharply in the build-up to the festival, although it remains to be seen if consumers will buy with their usual enthusiasm after a drop in gold prices.



Currently gold mostly stands flat, now significant news or events have happened recently. Previously we were concerned on possible upward continuation, but yesterday market has showed some drop and formed another bearish grabber - additional to the one that we already have:

On hourly chart our riddle looks like was clarified. Previously we've discussed perspective of H&S pattern. IF market would move above the neckline - pattern could be confirmed, while breakout below the bottom of right shoulder mostly would mean the failure. That is what we have right now. After yesterday drop market shows upside AB-CD retracement. So, if you would like to take short position - you can use Fib resistance levels of most recent swing down (that is in fact the swing of daily bearish grabber) with placing stops above it, i.e. above neckline:

 

[Sive Morten]

Gold Daily Update Wed 22, April 2015

Good morning,


Reuters reports today Gold reversed earlier losses to trade above $1,200 on Wednesday as the U.S. dollar weakened, with investors also keeping an eye on the Greek debt crisis and its impact on the currency markets.

"Gold is closely tracking the U.S. dollar at the moment. There isn't any big economic data so investors are following the Greek drama," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

A strong rally in stock markets was also keeping investors out of gold, Leung said.

Japanese shares rose to a 15-year high on Wednesday on expectations of improved corporate earnings.

Gold, often seen as a safe-haven investment, tends to see a drop in demand when equities are doing well.

The dollar eased against a basket of major currencies on Wednesday after putting in a mixed performance overnight.

Greece, which is quickly running out of cash, pledged to its eurozone partners in February that by the end of April it would agree with creditors on a comprehensive list of reforms to get 7.2 billion euros remaining from its bailout.

But no package will be ready by Friday, when eurozone ministers are to meet in Riga, and it was also unlikely that one would be ready by the end of the month, according to a senior eurozone official.

Prolonged uncertainty over the debt crisis - which if unresolved could see Greece exiting the euro zone - could boost demand for bullion, seen as a safe haven, although the resulting strength in the dollar could limit gains.

In a reflection of investor sentiment, SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings rose 0.45 percent to 742.35 tonnes on Tuesday.

Traders were also monitoring activity in the physical markets.

India, the top bullion consumer, celebrated the gold-buying festival of Akshaya Tritiya on Tuesday. Gold purchases started slowly, despite a fall in local prices, as hard times in rural areas have hit demand and many buyers were holding back because they expected prices to fall even further.



So, picture on daily gold is not very peaceful for bears. The point is yes, we have two grabbers, but market doesn't move lower. If we recall 3-period rule, that probably we should be out of bearish positions right now. But this could be only as preliminary caution mesure, not a neccesity yet, since technically, at least by letter, bearish setup has not been destroyed yet.
Another moment on daily - this could be bullish dynamic pressure - trend has turned bearish but price stands flat and building energy:

On 4-hour chart we mostly have triangle pattern, while market will fluctuate inside of it - it will be mostly unclear on direction of possible breakout. We only could recall bearded rule - that breakout should follow to direction that was prior the triangle was formed (i.e. upside)... Let's see:

On hourly chart also there is no clarity yet - market still stands inside the swing of last daily grabber. Currently action looks like retracement after plunge, but again - all will depend on direction of breakout through extreme points. Upside breakout will give us hourly H&S pattern, while downward one - will singificantly increase chances on new lows...

 

[Sive Morten]

Gold Daily Update Fri 23, April 2015

Good morning,


Reuters reports Gold was stuck below $1,200 an ounce on Thursday, following its biggest drop in over a month, as strong U.S. housing data stoked expectations the Federal Reserve would raise interest rates soon.

"While the overnight fall still leaves gold within ranges of the past month, we expect to see gold prices resume a downtrend in the near term," said ANZ analyst Victor Thianpiriya.

"Both the macroeconomic environment and the physical market remain unsupportive of prices," he said.

Bullion took a hit after data showed U.S. home resales surged to their highest level in 18 months in March as more homes came on the market.

The data prompted many to think the Fed could raise interest rates as early as June, a move that could dent demand for gold, a non-interest-paying asset.

The dollar rose against a basket of major currencies on Thursday following the data, also weighing on gold, which tends to gain on safe-haven bids when the greenback falls.

The focus will now be on more U.S. data to be released later in the day and the Fed's policy meeting later this month, as traders look for stronger clues about the timing of the rate rise.

Markets were also watching the unfolding of the Greek debt crisis.

Greece can scrape together enough cash to meet its payment obligations into June, euro zone and Greek officials said on Wednesday, playing down fears of an imminent default as hopes receded of a deal with its creditors to release fresh aid.

Uncertainty over the crisis, which could lead to Greece leaving the euro zone, could boost safe-haven bids for gold.

Asian shares rose despite a soft survey on Chinese manufacturing as it only whetted expectations of more policy stimulus there.

China's factory activity contracted at its fastest pace in a year in April, a private survey showed, suggesting that economic conditions are still deteriorating.

The gains in equity markets further dented demand for gold.


So, as we've said yesterday - this will mostly the question of breakout and recent drop has increased chances of daily grabbers. At least some action to the downside has started. The target of the grabbers stands at lows around 1175 - slightly under MPP.
But if they will be hit, this could start chain reaction and gold could start significant drop down. In this case logical target seems to be an Agreement around 1170 level:

Still current action looks very heavy and unstable, with no signs of thrust and we have to be careful, dealing with it. On 4-hour chart we see that before breakout - market was not able to touch border of triangle and this tells that breakout is really coud be truth. But to get more confidence it would be nice if we would get moving below 1183 lows as well. This will destroy even theoretical chances on any upside patterns, say butterfly:

Take a look how clear downward action has started - we've mentioned on first evening star, while market later has formed another one and then dropped. As we've said - we will have the chance for short entry after breakout and now it seems that 1193-1196 area is not bad one for taking short position. K-resistance and former bottoms.

 

[Sive Morten]

Gold Daily Update Fri 24, April 2015

Good morning,



Reuters reports today Gold clung to overnight gains on Friday on sluggish U.S. economic data but the metal was poised for its third straight weekly drop on persistent uncertainty over when the Federal Reserve will begin to hike rates.

The weak data hurt the dollar and boosted safe-harbour bids for gold, but added to the uncertainty over whether the Fed will hike rates in June or September.

Attention will now turn to the Fed's policy meet next week for stronger clues on when the U.S. central bank would begin rising rates.

"Should the FOMC ... prove hawkish, we may expect gold to fall swiftly and embark on a new downtrend to $1,145," said Howie Lee, an analyst at Phillip Futures, referring to the Federal Open Market Committee.

Bullion investors fear an early rate hike to reduce demand for gold, a non-interest-paying asset.

The metal is down about 1 percent this week, its sharpest decline in seven weeks.

In wider markets, the dollar nursed losses on Friday after underwhelming U.S. economic news, while signs that cash-strapped Greece was making tentative progress in securing fresh funding helped underpin a broad rally in the euro.

Bullion investors were also closely monitoring developments in Greece, as any worsening could prompt haven bids for the metal.

German Chancellor Angela Merkel said on Thursday everything must be done to prevent Greece running out of money before it reaches a cash-for-reform deal with its international creditors, amid heightened concern that Athens is nearing the brink.

Traders were also eyeing the Asian physical markets for signs of increased demand that would support global prices.

In China, the second biggest consumer, premiums eased to about $1 an ounce over the global benchmark from about $2 in the previous session as price gains kept buyers away.

In top consumer India, demand is set to taper out after strong sales on the Akshaya Tritiya festival on Tuesday.

Though gold purchases rose about 15 percent during the festival, when it is considered auspicious to buy gold, buying tends to soften soon after, likely leading to lower imports as well.



At first glance it seems that gold has the same picture as EUR. But this is not correct. EUR has shifted trend bullish, taken out recent top and stands very close to overbought. On Gold we do not see any features of this kind. All that we see is just minor upward retracement.
On daily chart we see only one similar feature - gold has theoretical chances to form upside butterfly. And this is the only reason if you would like to take long. The major advantage is that you can place very tight stop. But we, guys, can't call you to do this, since market has no bullish context. Trend is bearish, patterns are bearish, action is bearish. Only if you would like to anticipate butterfly - you can take this risky step.

4-hour chart shows major difference with EUR. While currency has returned back in prevously broken channel - gold is not. It is just re-tested broken line. And this, in turn advantage of the bears. Because bears also could place very close stop - just above 1200. Because if market will return back in triangle - it will mean that breakout was fake and upward action will follow:

Hourly chart shows the same. Actually guys, we're at level that we've discussed yesterday as an area for taking short position. 1200 is also Fib resistance. So, our opinion is that context is still bearish and bulls have just possible butterfly, but it is not fact yet that it will be formed....