GOLD PRO WEEKLY, August 08 -12, 2016

[Sive Morten]

Fundamentals

(Reuters) Gold fell as much as 1.7 percent on Friday, as the dollar rose after U.S. data showed employment increased more than expected in July, raising the probability of an interest rate hike from the Federal Reserve this year.

U.S. nonfarm payrolls increased by 255,000 jobs last month, the Labor Department said on Friday, up from an expectation of 180,000. Spot gold fell to a one-week low of $1,336.46 an ounce and was down 1.7 percent at $1,338.25 by 2:48 p.m. EDT (1848 GMT). It was on track for its weakest session since July 12 and set to finish the week down 0.9 percent.

The most active U.S. gold futures for December delivery settled down 1.7 percent at $1,344.40 per ounce.
"I don't think all the new retail investors are very happy with this direction," said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management in Seattle. "Now the employment trend is pretty positive and the market has to price in a rate hike." Gold is highly sensitive to rising U.S. interest rates, as
the opportunity cost of holding the non-yielding asset increases.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund rose to the highest since July 11 on Thursday. Though the market appeared to be increasing the odds for the Fed to raise U.S. interest rates as early as September, Haworth said he still does not expect to see a hike until December.

Deutsche Bank analyst Michael Hsueh said that investors will now monitor movements on 10-year real yields, relative to which gold looks overpriced. The benchmark 10-year U.S. Treasury yield rose to session highs of 1.587 percent.

Deutsche Bank expects a single U.S. rate hike this year. The dollar rose 0.4 percent against a basket of six major currencies and global stock markets firmed. Among other precious metals, spot palladium was down 1.2 percent at $695.55 an ounce. The metal, used in autocatalysts and as an investment, was heading for its first weekly loss after six weeks of gains.

"If supply uncertainty starts to fade and economic data in Europe disappoint, sentiment (towards palladium) could change for the worse," ABN Amro said in a note.

COT Report

Last week CFTC data shows increasing net long speculative positions and open interest. So, total long positions stand at all-time highs. Recent retracement was too small and it has not led to significant profit taking and contration of long positions. Thus, it means that most traders still keep longs and recent price decrease has not reached stops. As a result, gold again has limited upside potential because everybody already keep longs and nobody who could support current uptrend and buy more.

Technicals
Monthly

August month right now stands inside one to July and mostly keeps our analysis the same.

Technically current 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.

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.

Now market is approaching to major, all time 3/8 Fib resistance @ 1380 level. First reaction already has followed, as gold has dropped. But this drop has not taken the shape of tendency yet. Let's see how situation will change in coming month:

Weekly

As we've said last week based on analysis of monthly chart, we probably should be focused on searching downward reversal patterns, that could confirm (or destroy, may be) our thoughts on monthy pattern.

Last week we've said - It seems that something is forming here, some really important thing will follow, and probably soon, but not yet, as market just has finished upside action. Initially we've made an assumption that it could be H&S pattern, because current top stands precisely at 1.618 extension of tprevious swing up and right at top we've got bearish engulfing patter.

But last week we've got opposite pattern that could adjust or even cancel this idea of H&S. This is bullish stop grabber. What changes could happen by this pattern? Most soft one is just W&R of previous top, if market just will grab stops above the top and drop again down. This will not cancel overall idea of H&S pattern, but postpone it for week or two...

More radical consequences will happen, if market will break 1380 top and hold there. In this case we will have to review our medium term strategy and just wait for new inputs and patterns to understand what is going on.

Currently, it seems that shy jump above 1380$ and return looks more logical compares to stable upside trend, just because gold has not reached neckline on monthly chart and major 3/8 resistance. Thus, it could happen so that market will touch it and then take another chance to turn down. Especially, taking in consideration high levels of net long speculative positions, stable upside trend right now looks doubtful.

Finally, grabber just could fail... this is also possible.

Anyway, weekly chart right now gives us very important information - do not go short until situation around weekly grabber will be resolved. And another issue that stands with tight relation with previous one - what will happen when minimal target of this grabber will be hit.

As NFP data was really positive gold has dropped slightly lower but not sufficient to destroy the grabber. We mostly should treat this move down as retracement by far. Thus, weekly chart has not changed much after NFP release and mostly shows the same setup that we had last week.

Daily

Situation on daily chart remains tricky. Mostly because gold keeps door open for many patterns and some of them contradict to each other. Thus, we have bullish grabber on weekly chart, and on daily, gold could form, say, butterfly "Sell" pattern that mostly supports grabber's idea.
From another point of view gold has dropped below MPP, and could form Double Top here. Even drop to neckline of this pattern will erase weekly grabber. Second bearish moment - gold for second time was not able to break up long candle range and returned back. Drop on daily chart is not light, so, this could lead at least to 1300 level again and this could also put under question grabber on weekly chart.

That's being said, usually when market creates such sort of situation, final direction will be estimated only after breakout. In our case this is long - ranged Brexit candle. To be honest, guys, taking in consideration gold's habbits, and overall situation, we have doubts on real upside trend continuation. Gold needs some relief, that why, W&R of the tops - yes, it is possible, but not a stable upside continuation. Hence, downward action will happen and start anyway, the difference is just how it will start with W&R of 1380 tops or without it.

Intraday

On 4-hour chart - do not forget about our H&S pattern. It does not look really nice - puny left shoulder, too extended right one, both shoulders are rather high in relation to head. But shape could be recognizable and gold has dropped from an area where it should to, as soon as it has become obvious that NFP probably will be good. Still, somebody could recongnize here triangle as well. And this is also not a mistake:

Most interesting on intraday chart is a setup with NFP thrust and Agreement area:

As you can see gold has completed 1.618 AB-CD target near Fib support. As thrust down looks nice, this support could become a reason for appearing of B&B or even DRPO patterns. Thus, scalp traders could become interesting with it...

Conclusion:
We continue to keep long-term bullish view on gold market. But now chances on deep retracement are very high due combination of as sentiment as technical moments. Partially we even could recognize thrilling pattern on monthly chart which brings more clarity and shows definite levels to watch for. Now is the major question whether it will be formed or not.

In short-term perspective recent data, coming NFP and Fed brings a lot of turbulence in price behavior and situation has become sophisticated. We think that gold is overextended to upside and relief is just neccesary thing. Thus, the question is mosty not about whether it will be any retracement, but how it will start. W&R of 1380 is most typical action for gold market, but simple downward continuation is also possible.

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 slipped on Tuesday and continued to hover near one-week lows hit in the previous session as the dollar firmed amid increasing possibilities of a rate hike by the U.S. Federal Reserve this year.
Spot gold eased 0.2 percent to $1,331.97 an ounce by 0632 GMT. The metal touched its lowest since July 29 at $1,329.55 on Monday. U.S. gold edged down 0.3 percent to $1,337.60 an ounce.

The dollar index, which gauges the greenback against a basket of six major rivals, erased earlier slight losses and edged up 0.1 percent to as much as 96.514. "Gold prices are in defensive mode after suffering quite a bit on Friday. It reflects market's expectations of a rate hike by the U.S. Fed in December," said Vyanne Lai, an economist at National Australia Bank. "However, the prices are not going to weaken significantly in the near term."

Prices have been resilient in the face of a rising U.S. dollar and prospects of a rate hike as other countries are increasingly looking to raise stimulus, Lai said. The U.S. economy is at increasing risk of becoming trapped in a prolonged phase of slow growth that points to the need for lower interest rates than previously expected, Federal Reserve policymaker Jerome Powell was quoted as saying.

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. There were significant long positions last week and the liquidation after the non-farm payrolls data put pressure on prices, a Hong Kong-based precious metals trader said.

"Investors are still putting more money into gold. There is something on the horizon that they should be looking, especially the U.S. elections. That will give uncertainty to the markets and will be good for gold."

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.67 percent to 973.81 tonnes on Monday. Asian shares stood atop one-year peaks on Tuesday as a desperate search for yield drove a record inflow into emerging market funds, while oil prices tried to sustain their latest
bounce.

So, yesterday was quiet session and we mostly continue to watch for either downward breakout or failure upside breakout on daily chart. Only after one of these events real action will return on market. Currently we do not believe much in possible upside trend continuation:

For that purpose our pattern in focus will be this triangle on 4-hour chart, and especially the action of 4th wave inside of it:

Somehow we suggest that if gold will not touch low border of triangle and turn up - it will make a challenge of the tops around 1380. Other words, speaking, untouching of lower border and turning up will be a signal of upper breakout of triangle. Although we mostly will watch for W&R of the top, but anyway, this will be upside breakout, but short-term...

On hourly chart gold could form butterfly or some other reversal pattern. This is not really matter, how precisely gold will turn up. The most important the fact of upside reversal itself, but not the way how it will happen.
If not and gold will drop to lower border - then we will continue watching for going process inside triangle and how gold will out of it:

 

[Sive Morten]

Good morning,

(Reuters) Gold rose more than 1 percent on Wednesday as the dollar fell on lower expectations for a U.S.
rate hike after weaker economic data, while platinum and palladium climbed to their highest in over a year.

Spot gold had risen 1.1 percent to $1,354.44 an ounce by 0653 GMT, after gaining 0.4 percent in the previous session. U.S. gold was up 1 percent at $1,360.60 an ounce. Spot palladium surged 7.4 percent to $746.10 an ounce, the highest since June 2015. Platinum was up 2.4 percent at $1,177.80, after rising to $1,182.20, its loftiest in over 16 months.

"The overall trend is positive in platinum group metals. Mine strikes and trade union problems in South Africa are supporting platinum prices and palladium is going with that," a Hong Kong-based precious metals trader said. Platinum has risen over 32 percent so far this year, closely followed by palladium, which has gone up about 30 percent. Gold, meanwhile, climbed after a report that U.S. worker productivity fell for a third straight quarter in the spring this year.

"It's a noisy trading without trend. With a falling dollar, we would see short term rise in gold and silver prices," said Jiang Shu, chief analyst at Shandong Gold Group. "The dollar is due for a rising trend and the gold rally, although it has some short term upside, can't last very long." The dollar index, which gauges the greenback against a basket of six major currencies, fell 0.3 percent to 95.891
.
"There did not seem like many sell orders on the way up, which had been a feature of the past few days post nonfarm payrolls data, with all the interest focused on the buy side," MKS PAMP Group senior precious metals dealer Alex Thorndike said in a note.

The unexpected drop in U.S. productivity may confirm the U.S. Federal Reserve's fears that the economy may slip into a period of slow growth, reducing the central bank's willingness to raise interest rates.
Gold is highly sensitive to rising U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell for a second straight day on Tuesday. It slipped 0.12 percent to 972.62 tonnes from Monday.

On daily gold we could get old trap - early reversal. As you can see on daily chart we have uncompleted minor AB=CD right at top and market has not hit its target that agrees with MPR1 ~1380$. Every time when we see this trap - we warn you against taking short position, at least until target been hit.

Besides on weekly chart we have pattern, bullish grabber, that suggests the same upside action. So, currently we can't say definitely what will happen above 1380, but even minor action suggests move to 1392 probably and completion of potential butterfly "Sell" pattern here.

On 4-hour chart we've specified another important issue for short-term market behavior - early upside reversal inside triangle. And take a look - it stands under way:

That's why, if you have bearish view on gold market and want to go short - wait until either grabber will be completed above 1380 and gold will finish butterfly "Sell", or until gold will erase it by drop below 1300 area.

If you have bullish view on gold and want to trade it up - take a look also at hourly chart. Upward action here stands very good, thus, you could focus on some short-term retracement that could improve your entry point. Currenlty, it seems that bounce to Fib level and WPP could be suitable for this purpose:

 

[Sive Morten]

Good morning,

(Reuters) Gold fell on Thursday for the first time after rising in the previous two sessions, as investors cashed in recent gains and a recovery in the dollar added to the metal's current volatility.

Spot gold fell 0.3 percent to $1,342.61 an ounce at 0336 GMT. On Wednesday, the yellow metal went up as much as 1.3 percent, touching a high of $1,357.17.

U.S. gold slipped 0.2 percent to $1,348.60 an ounce.

"The profit taking is triggered by people's changing expectations because of the mismatch between different central bank moves," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

Supported by positive economic data, investors expect the U.S. Federal Reserve to raise rates in December, but other countries are increasingly looking to raise stimulus. The Reserve Bank of New Zealand cut rates on Thursday.

"I think that kind of divergence between the Fed and the other central banks is making the so called optimism in gold prices wait for a little longer."

The dollar index, which measures the greenback's value against a basket of major currencies, rose on Thursday after touching a near one-week low of 95.442 on Wednesday. It last traded at 95.714, up nearly 0.1 percent.

Spot gold may fall into a range of $1,334-$1,339 per ounce, as per Fibonacci projection analysis, according to Reuters technical analyst Wang Tao.

"It is difficult to get a clear handle on the short-term direction of gold, as the complex seems to be teeing off on dollar weakness and what seems to us to be general complacency about the central banks being reluctant to take hawkish action on the rate front," INTL FCStone analyst Edward Meir said in a note.

"However, strong U.S. macro numbers or rebounding equities could change this calculus, since they raise the spectre of higher rates and alternative investments with potentially better returns."

Gold is highly sensitive to rising U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which the metal is priced.

Asian shares fell on Thursday, reversing recent gains following losses on Wall Street, though regional currencies rose after Beijing let the Chinese yuan strengthen.

So Gold market has taken some relief today, but it doesn't impact on our view. Recall that we have setup not only on daily but on weekly chart as well, since upside action right from 1300 lows is bullish grabber. To destroy it - market should drop back below this area. That's why, until market stands above it our short-term bullish view is valid.
Currently we see that some political shifts could come that will support gold. Ms. May meeting with Putin, as well as Erdogan meeting definitely will lead to big shifts in global policy. Also yesterday was an attempt of terrorists atack from Ukranian military forces in Cremea that was canceled by Russian inteligent agency, but agents were killed. This is act of terror and hardly it will be forgotten. These growing tensions could bring some support to gold in shor-term perspective.
Technically, daily picture has not changed significantly. Thus we still think that gold should clear out 1380 tops:

On 4-hour chart now we could better estimate nearest target. It stands around 1390 - as we could get 2 butterfies with the same destination point:

Currently gold holds both paterns. Yesterday it has shown accurate 5/8 retracement and now is turning up again. Watch for possible bullish grabbers on 4-hour chart. They could bring more confidence with upward action:

 

[Sive Morten]

Good morning

(Reuters) Gold remained little changed on Friday,hovering near lows touched in the previous session, as the dollar stayed firm on expectations of a rate hike by the U.S. Federal Reserve this year.
Spot gold was flat at $1,338.07 an ounce by 0636 GMT.

It ended down 0.6 percent at $1,338.39 on Thursday. The metal, however, was on track for a weekly gain.
U.S. gold slipped 0.4 percent at $1,344.1 an ounce. "The market is waiting for more cues on a U.S. rate hike. There is a big mix of data with some being supportive and some being not," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

Spot gold may bounce moderately in a narrow range of $1,344-$1,349 per ounce, before retesting support at $1,335, as suggested by its wave pattern and a Fibonacci projection analysis, Reuters technical analyst Wang Tao said. "For the moment it looks like gold is being squeezed into a 1330-1360 consolidation form with a slight short-term negative bias," trading firm MKS Pamp said in a note.

The U.S. Fed is likely to raise interest rates in December, after the Nov. 8 presidential election, according to a Reuters poll. The firm dollar was supported by comments from San Francisco Fed President John Williams that suggested a U.S. interest rate increase this year is still a real possibility as inflation
pressures grow. A stronger dollar discourages gold buying by making it more expensive in other currencies.
The U.S. dollar was at 95.931 against a basket of currencies, while Asian stocks rose slightly in early Friday
trade, taking a cue from Wall Street's records overnight.

"Gold should hold steady above $1,300. There could be a knee-jerk reaction on a rate hike. But, overall global economic situation is still favouring the metal," a China based trader said.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.03 percent to 972.32 tonnes on Thursday.

On daily chart of gold market nothing is going on yet, gold is just coiling around MPP, keeping our analysis valid and intact. Today market expects Retail sales release that seems to be important and could push market in one or other direction. Until gold stands above 1300 area - it keeps chances on upside splash above1380 top:

On our first 4-hour picture - gold shows some decrease, but still holds above the lows, that have been formed 2 days ago and keeps valid potential upside minor butterfly:

On our second chart - gold has formed "222" Buy pattern by making downward AB=CD retracement:

That's being said, nothing drastical has happened yet, that could break our short-term expectation. Let's see how Retail sales will impact on market behavior.