Sive Morten
Special Consultant to the FPA
- Messages
- 18,635
Fundamentals
(Reuters) - Gold prices climbed to two-month highs on Friday, rising for the fourth straight day as investors sought refuge amid escalating tensions between North Korea and the United States, while bullion also
received support from weak U.S. inflation data.
U.S. President Donald Trump issued a new threat to North Korea on Friday, saying the U.S. military was "locked and loaded" as Pyongyang accused him of driving the Korean Peninsula to the brink of nuclear war and world powers expressed alarm.
Spot gold was up 0.2 percent at $1,287.91 an ounce by 2:03 p.m. EDT (1803 GMT), and set for its biggest weekly gain since mid-April. It earlier hit $1,291.86, its highest level since June 7. U.S. gold futures settled up 0.3 percent at $1,294.
"There is a continuation of flight to the safe havens after remarks on Thursday evening from Trump about North Korea," said Quantitative Commodity Research consultant Peter Fertig. "It's not very likely that these tensions will ease in the near future so the outlook seems supportive for gold."
Geopolitical risks can boost demand for assets considered safe-haven investments, such as gold. "There remains huge uncertainty as to how the current geopolitical crisis will play out and this may support gold
prices over the coming weeks," said Capital Economics in a research note. "On the other hand, if Trump's threats prove to be nothing more than inflammatory rhetoric – as on previous occasions – we would not be surprised to see the gold price retreat as the focus of investors returns to Fed tightening."
Data on Friday showed U.S. consumer prices rose less than expected in July, which was also supportive to gold.
"If you look at the gold price after the CPI (inflation) data, it tells you that the Fed is not going to be in any rush
to increase the interest rate this year," said Naeem Aslam, chief market analyst at Think Markets. "The level which we are looking at now is $1,300."
The dollar index dipped to a one-week low after the data.
COT Report
Sentiment on gold looks moderately bullish. "Moderately" is because rally is powered by short covering but not new injection of liquidity and gold purchasing. As data shows net long position increased for 4 weeks in a row, while open iterest moves in opposite direction. This combination only is possible if traders close shorts.
SPDR Fund shows strong divergence between physical reserves and gold price. While price has jumped solidly in recent week - storages are mostly stagnated. It means that sooner or later this divergence should be neutralized. My personal view is increasing of storages and gold turning to real bull trend.
Here is my 2 cents on situation.
Actually guys, I suppose that FPA should initate some political blog - not to investigate who's right and who's wrong and not for debates, but for undertsanding what impact policy could make on markets. Something like zero hedge fund resource. You probably should know about it.
Right now it is too long story to put it here, but in two words I tell you what is going on. In early 90's world has got political vacuum as EU was under total control of US, USSR was destroyed, China power is yet to start to grow and it was no balance to US power in the world. This has led to global disaster as powerful political and economical clans in US have created above-government power. It was invisible and on paper it was the same Senate, Congress, President, elections etc, but in reality US power was controlling by limited number of persons who were in shadow and people thought that decision were making on behalf of president and in favor of US. But as you understand this was not quite so. I call them as "Demoncrats". H. Clinton is just a top of an iceberg, "representative", public person of their power. But they are everywhere - in government, mass media, culture, social institutes, and of course FBI, CIA, military forces, Congress and Senate (J. McCain, btw). So, these demoncrats have built spread chain across the globe to control governments of other countries as well. This was in Russia, in EU and everywhere. A lot puppet governments across the board and in recent times they were created by colour revolutions. This is strong 5th Column in US right now who were and partially are at power for decades.
So, just to not dive in wide talks, D. Trump and forces who stand behind him would like to re-establish normal parity between East and West and just live, make business etc with repsecting interest of each other in different regions. In two words - US should leave some positions and focus on its own domestic problems. For that they will get time for economy resturcturing and resolving problems with national debt to escape global financial catastrophy.
But in last 2-3 weeks situation in US is becoming dramatic. Demoncrats just can't calm down and do not understand that this is not D. Trump loosing power - this is US is loosing power due their dirty affairs and respect in the world. To crush demonocrats US could need hot conflict either outside - here I see that situation with N. Korea is not occasional, or inside US, to put all responsibility on Demoncrats and finally destroy them. This could be some kind of Civil war. When D. Trump just has come to presidency it was seemed that calm and gradual scenario will be, but now situation day by day is becoming worse.
Why I'm talking about all this stuff - it's all about gold. Gold will rise if our suspicions will be confirmed. But guys, don't think that I'm crazy and is under theory of global conspirancy... I'm really far from it. Demoncrats has lost their power as US currently can't resolve their problems by military forces. This time has gone. That's why demoncrats right now stands in very dificult situation. They can't support previous global order but they want it very much.
This is very cruel world, if some country controls the world for a long time but somehow it is clear that it has no military power to continue control it - other countries will take it place. I think particular these processes we see right now... And it is very painful for demoncrats. In one or other ways but demoncrats will be destroyed, but it could be really painful for simple people in US and some other countries who might be involved in this process.
Currently guys, wars are going different. We do not see any more mass distruction, because winner doesn't need huge mass of hungry population and totally destroyed infrastructure. Current war stands under cover and you could see just results. Thus, in 1991 USSR has been eliminated - was it destroyed physically? Surely not, but it was put under control and governing of western corporations, banks, different live style, social values etc. So, country was under external control, but without hot phase of war. Now we see the same in Syria - Russia totally controlled situation. No talks on "Assad must go" etc. Everybody understand that party is over. Demoncrats plan has been totally vanished. But - in mass media it looks like "war against ISIL". For the whole world population there is a picture - everybody in Syria - US coalition, Israel, Russia and everybody fights ISIL for 5 years. I'm not so naive to believe in this tales. So, the whole world's military power can't crush camel-drivers... It's an absurd. ISIL just was created to make matrix - false reality of real war. it was a disguise for ungoing process there... It is really wide topic, but I hope you've got the core.
So, putting its all together, I'm positive on gold market.
Technical
Monthly
So, on monthly chart I will keep picture of our bearish scenario, but in the light of recent events, chances that it will be realized have diminished significantly. As in July as in August (right now) we have tail closing of price. Trend has turned bullish again and it's really big chances that gold will break 1380 top. But as technically this has not happened yet - let's keep it for awhile as it stands right now.
Theoretically market still keeps double-sided setup as bullish as bearish patterns are not destroyed yet by price action. Crucial level for them is 1122 area. As we have discussed recently, upside scenario could lead market to 1330 YPR1 first and back to 1380 second, while bearish scenario you see on the chart...
As we talk about changes in sentiment last two weeks, let's take a look at alternative scenario on gold market, compares to what we've discussed previously. Scenario that we will talk about has not been formed yet and it has some degree of uncertainty as major levels that are crucial for this scenario, have not been broken yet.
In fact, our previous scenario on possible reverse H&S pattern is still valid. The breakeven point between these scenarios stands around 1120 lows. If Price will drop below it - gold siginficantly will increase chances on downside continuation.
It means that we could get either big Butterfly "Buy" pattern with potential target around 950$ or, at least "222" Buy around 1040 area on monthly chart . Until price stands above 1122 lows - there will be some uncertainty around them as gold also could form opposite pattern, we will take a look at it below. But breaking of 1122 will erase any questions...
Weekly
In general weekly chart shows alternative scenario that stands in relation to the same 1122 lows. While market stands above this level - big butterfly "Sell" is possible, at least theoretically. It's first destination point stands at 1440.
Last 4 weeks was rather strong action here and gold for the 3rd time penetrates 1278 fib level, that is mostly erased. Trend has turned bullish again here. And most important thing on coming week is 1300 area breakout. This will be very important moment technically. In this case we will be watching for our nearest 1330 target - 0.618 of wide AB-CD pattern.
Now gold has more chances to do so, as harmony of daily pattern has been broken. Gold has no real barriers till 1370 top as major levels have been broken already. That's why short-term picture for gold also looks positive. Besides, recent poor inflation data on US economy keeps small chances on rate increase in December and that was major limit factor for gold.
Daily
Daily trend is bullish as well. Friday action was not too strong, thus, here is mostly the same picture that we've discussed. The ceil for Mon-Tue action is 1300 area as there we have OB. But, only if we will not get new political inputs. Fundamentals overrule technicals and gold could move in OB strongly.
Here we see only one pattern here. This is butterfly "Sell" and it has the same 1330 first destination point. Most important for coming week is 1300 area and its breakout (or no breakout). It has good chances to be completed as market has broken harmony of our "figure" here, shoulder-type peak has been broken up. Besides, there are a lot of stops probably above 1300 that will provide fuel for jump to 1330...
4-hour
Trend is bullish here and we have few moments to talk about. First is - no cross of 3x3 DMA yet. Thus, although thrust is good but no preliminary steps for DRPO or B&B were made. If we will get B&B "Buy" here - it will be royal gift really...
Second is high wave pattern. Mostly this is directional candle, not in terms of DiNapoli framework, but in terms of direction per se. Thus, if gold will break highwave up - upside action will continue and we should be ready for testing of 1300 area, while if price will drop down - be ready for B&B, I suppose.
Finally - we have bullish grabbers that significantly increase chances of first scenario - direct action right to 1300 area. They suggest that highwave should be broken up. Actually there are no real barriers above - no OB, no Fib levels that could prevent this - just MPR1. That's why this is very probable...
Still, if somehow gold will turn to downside bounce - watch for B&B "Buy" around 1276 Fib level, as price will gravitate to WPP that stands nearby.
Conclusion
Long term charts keep valid two opposite scenarios with thrilling scale. The separate line between them is 1122 area. Although theoretically both are possible by far recent global events and political affairs bring more chances on upside breakout.
In short-term charts chances on reaching 1300 also stand prefferable, but if still gold will turn to retracement, we could watch for B&B pattern around 1275 area.
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.
(Reuters) - Gold prices climbed to two-month highs on Friday, rising for the fourth straight day as investors sought refuge amid escalating tensions between North Korea and the United States, while bullion also
received support from weak U.S. inflation data.
U.S. President Donald Trump issued a new threat to North Korea on Friday, saying the U.S. military was "locked and loaded" as Pyongyang accused him of driving the Korean Peninsula to the brink of nuclear war and world powers expressed alarm.
Spot gold was up 0.2 percent at $1,287.91 an ounce by 2:03 p.m. EDT (1803 GMT), and set for its biggest weekly gain since mid-April. It earlier hit $1,291.86, its highest level since June 7. U.S. gold futures settled up 0.3 percent at $1,294.
"There is a continuation of flight to the safe havens after remarks on Thursday evening from Trump about North Korea," said Quantitative Commodity Research consultant Peter Fertig. "It's not very likely that these tensions will ease in the near future so the outlook seems supportive for gold."
Geopolitical risks can boost demand for assets considered safe-haven investments, such as gold. "There remains huge uncertainty as to how the current geopolitical crisis will play out and this may support gold
prices over the coming weeks," said Capital Economics in a research note. "On the other hand, if Trump's threats prove to be nothing more than inflammatory rhetoric – as on previous occasions – we would not be surprised to see the gold price retreat as the focus of investors returns to Fed tightening."
Data on Friday showed U.S. consumer prices rose less than expected in July, which was also supportive to gold.
"If you look at the gold price after the CPI (inflation) data, it tells you that the Fed is not going to be in any rush
to increase the interest rate this year," said Naeem Aslam, chief market analyst at Think Markets. "The level which we are looking at now is $1,300."
The dollar index dipped to a one-week low after the data.
COT Report
Sentiment on gold looks moderately bullish. "Moderately" is because rally is powered by short covering but not new injection of liquidity and gold purchasing. As data shows net long position increased for 4 weeks in a row, while open iterest moves in opposite direction. This combination only is possible if traders close shorts.
SPDR Fund shows strong divergence between physical reserves and gold price. While price has jumped solidly in recent week - storages are mostly stagnated. It means that sooner or later this divergence should be neutralized. My personal view is increasing of storages and gold turning to real bull trend.
Here is my 2 cents on situation.
Actually guys, I suppose that FPA should initate some political blog - not to investigate who's right and who's wrong and not for debates, but for undertsanding what impact policy could make on markets. Something like zero hedge fund resource. You probably should know about it.
Right now it is too long story to put it here, but in two words I tell you what is going on. In early 90's world has got political vacuum as EU was under total control of US, USSR was destroyed, China power is yet to start to grow and it was no balance to US power in the world. This has led to global disaster as powerful political and economical clans in US have created above-government power. It was invisible and on paper it was the same Senate, Congress, President, elections etc, but in reality US power was controlling by limited number of persons who were in shadow and people thought that decision were making on behalf of president and in favor of US. But as you understand this was not quite so. I call them as "Demoncrats". H. Clinton is just a top of an iceberg, "representative", public person of their power. But they are everywhere - in government, mass media, culture, social institutes, and of course FBI, CIA, military forces, Congress and Senate (J. McCain, btw). So, these demoncrats have built spread chain across the globe to control governments of other countries as well. This was in Russia, in EU and everywhere. A lot puppet governments across the board and in recent times they were created by colour revolutions. This is strong 5th Column in US right now who were and partially are at power for decades.
So, just to not dive in wide talks, D. Trump and forces who stand behind him would like to re-establish normal parity between East and West and just live, make business etc with repsecting interest of each other in different regions. In two words - US should leave some positions and focus on its own domestic problems. For that they will get time for economy resturcturing and resolving problems with national debt to escape global financial catastrophy.
But in last 2-3 weeks situation in US is becoming dramatic. Demoncrats just can't calm down and do not understand that this is not D. Trump loosing power - this is US is loosing power due their dirty affairs and respect in the world. To crush demonocrats US could need hot conflict either outside - here I see that situation with N. Korea is not occasional, or inside US, to put all responsibility on Demoncrats and finally destroy them. This could be some kind of Civil war. When D. Trump just has come to presidency it was seemed that calm and gradual scenario will be, but now situation day by day is becoming worse.
Why I'm talking about all this stuff - it's all about gold. Gold will rise if our suspicions will be confirmed. But guys, don't think that I'm crazy and is under theory of global conspirancy... I'm really far from it. Demoncrats has lost their power as US currently can't resolve their problems by military forces. This time has gone. That's why demoncrats right now stands in very dificult situation. They can't support previous global order but they want it very much.
This is very cruel world, if some country controls the world for a long time but somehow it is clear that it has no military power to continue control it - other countries will take it place. I think particular these processes we see right now... And it is very painful for demoncrats. In one or other ways but demoncrats will be destroyed, but it could be really painful for simple people in US and some other countries who might be involved in this process.
Currently guys, wars are going different. We do not see any more mass distruction, because winner doesn't need huge mass of hungry population and totally destroyed infrastructure. Current war stands under cover and you could see just results. Thus, in 1991 USSR has been eliminated - was it destroyed physically? Surely not, but it was put under control and governing of western corporations, banks, different live style, social values etc. So, country was under external control, but without hot phase of war. Now we see the same in Syria - Russia totally controlled situation. No talks on "Assad must go" etc. Everybody understand that party is over. Demoncrats plan has been totally vanished. But - in mass media it looks like "war against ISIL". For the whole world population there is a picture - everybody in Syria - US coalition, Israel, Russia and everybody fights ISIL for 5 years. I'm not so naive to believe in this tales. So, the whole world's military power can't crush camel-drivers... It's an absurd. ISIL just was created to make matrix - false reality of real war. it was a disguise for ungoing process there... It is really wide topic, but I hope you've got the core.
So, putting its all together, I'm positive on gold market.
Technical
Monthly
So, on monthly chart I will keep picture of our bearish scenario, but in the light of recent events, chances that it will be realized have diminished significantly. As in July as in August (right now) we have tail closing of price. Trend has turned bullish again and it's really big chances that gold will break 1380 top. But as technically this has not happened yet - let's keep it for awhile as it stands right now.
Theoretically market still keeps double-sided setup as bullish as bearish patterns are not destroyed yet by price action. Crucial level for them is 1122 area. As we have discussed recently, upside scenario could lead market to 1330 YPR1 first and back to 1380 second, while bearish scenario you see on the chart...
As we talk about changes in sentiment last two weeks, let's take a look at alternative scenario on gold market, compares to what we've discussed previously. Scenario that we will talk about has not been formed yet and it has some degree of uncertainty as major levels that are crucial for this scenario, have not been broken yet.
In fact, our previous scenario on possible reverse H&S pattern is still valid. The breakeven point between these scenarios stands around 1120 lows. If Price will drop below it - gold siginficantly will increase chances on downside continuation.
It means that we could get either big Butterfly "Buy" pattern with potential target around 950$ or, at least "222" Buy around 1040 area on monthly chart . Until price stands above 1122 lows - there will be some uncertainty around them as gold also could form opposite pattern, we will take a look at it below. But breaking of 1122 will erase any questions...
Weekly
In general weekly chart shows alternative scenario that stands in relation to the same 1122 lows. While market stands above this level - big butterfly "Sell" is possible, at least theoretically. It's first destination point stands at 1440.
Last 4 weeks was rather strong action here and gold for the 3rd time penetrates 1278 fib level, that is mostly erased. Trend has turned bullish again here. And most important thing on coming week is 1300 area breakout. This will be very important moment technically. In this case we will be watching for our nearest 1330 target - 0.618 of wide AB-CD pattern.
Now gold has more chances to do so, as harmony of daily pattern has been broken. Gold has no real barriers till 1370 top as major levels have been broken already. That's why short-term picture for gold also looks positive. Besides, recent poor inflation data on US economy keeps small chances on rate increase in December and that was major limit factor for gold.
Daily
Daily trend is bullish as well. Friday action was not too strong, thus, here is mostly the same picture that we've discussed. The ceil for Mon-Tue action is 1300 area as there we have OB. But, only if we will not get new political inputs. Fundamentals overrule technicals and gold could move in OB strongly.
Here we see only one pattern here. This is butterfly "Sell" and it has the same 1330 first destination point. Most important for coming week is 1300 area and its breakout (or no breakout). It has good chances to be completed as market has broken harmony of our "figure" here, shoulder-type peak has been broken up. Besides, there are a lot of stops probably above 1300 that will provide fuel for jump to 1330...
4-hour
Trend is bullish here and we have few moments to talk about. First is - no cross of 3x3 DMA yet. Thus, although thrust is good but no preliminary steps for DRPO or B&B were made. If we will get B&B "Buy" here - it will be royal gift really...
Second is high wave pattern. Mostly this is directional candle, not in terms of DiNapoli framework, but in terms of direction per se. Thus, if gold will break highwave up - upside action will continue and we should be ready for testing of 1300 area, while if price will drop down - be ready for B&B, I suppose.
Finally - we have bullish grabbers that significantly increase chances of first scenario - direct action right to 1300 area. They suggest that highwave should be broken up. Actually there are no real barriers above - no OB, no Fib levels that could prevent this - just MPR1. That's why this is very probable...
Still, if somehow gold will turn to downside bounce - watch for B&B "Buy" around 1276 Fib level, as price will gravitate to WPP that stands nearby.
Conclusion
Long term charts keep valid two opposite scenarios with thrilling scale. The separate line between them is 1122 area. Although theoretically both are possible by far recent global events and political affairs bring more chances on upside breakout.
In short-term charts chances on reaching 1300 also stand prefferable, but if still gold will turn to retracement, we could watch for B&B pattern around 1275 area.
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.
