GOLD PRO WEEKLY , February 06 -10, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold was little changed on Friday, erasing earlier losses as the dollar came under pressure from a U.S. payrolls report that flagged up weak wage growth last month, weakening the case for near-term interest rate hikes.

While U.S. job growth surged more than expected in January as construction firms and retailers ramped up hiring, wages barely rose.

Spot gold was unchanged at $1,215.75 an ounce by 2:25 p.m. EST (1925 GMT), off an earlier low of $1,207.10. U.S. gold futures for April delivery settled up 0.1 percent at $1,220.80 per ounce.

"Markets seem to be looking at the soft wage data, which signal rather weak inflationary pressure, and therefore less need for the Fed to raise interest rates," Commerzbank analyst Carsten Fritsch told the Reuters Global Gold Forum in the wake of the report.

The U.S. dollar and 10-year U.S. Treasury yields were little changed, having come off session highs. Gold is on track to rise around 2 percent this week as the dollar headed for a fourth weekly drop on worries about Donald Trump's presidential style and a lack of clarity on rate hikes.

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

Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Shares, rose for a second day on Thursday by 1.5 tonnes to 811.22 tonnes. A bounce in investment to a four-year high drove a modest
gain in gold demand last year, data from the World Gold Council showed on Friday, even as use of the metal in jewelry slid to its lowest since 2009 and coin and bar buying slid.

"ETF inflows were the sole driver of demand growth in 2016 - we saw the second highest inflows since 2009," the WGC's head of market intelligence Alistair Hewitt said.

COT Report

CFTC data shows strong contraction of open interest last week, which means that a lot of speculative positions has been closed as market has reached 1225 resistance. At the same time net position has increased as traders have closed more shorts than longs. As gold has turned to upside action in Dec-Jan, as speculative positions as open interest are mostly rise as well. At the same time rally was not supported by SPDR fund statistics and we made a conclusion that it is not very reliable.

Last week dynamic of SPDR fund has changed. At least it shows two strong inflows in very short-term period. Also take a look that last 814 tonnes level exceeds 809 tonnes 2 weeks ago, right at the eve of minor pullback on gold market. This could mean something...

Here it is neccesary to say that gold market right now stands in center of turbulence. Here is some tension point, because on monthly chart gold is forming big reversal pattern and now is culmination of this pattern - bottom of right shoulder. Because of this reason price action on lower time frames, as daily one, could become very chaotic, situation could change day-by-day, while gold will not stand on trend, whatever it will be...
Yesterday guys, we show you AUD analysis not just occasionally. AUD behavior and gold big reversal pattern could be links of the same chain, that supports each other...
January month shows very strong close and right now it's more confidence with mothtly H&S than it was in December...

Technicals
Monthly

Currently gold stands at very fragile basis. One step down further and fragile support will be broken while gold will drop back to 1000$ level. Gold is very specific asset, since it major driving factor for gold is fundamentals, especially inflation and interest rates, and - expectations, rumors. "Buy on rumors" proverb is particularly fair for gold market.

But here we come to most difficult moment. Mostly because fundamental background for gold market is very blur. D. Trump victory and uncertainty around its economy policy, massive political turmoil in Europe and affer foreign affairs do not let us to estimate clear fundamental picture by far.

On Friday, as we've suggested, NFP data was mixed. At first glance 222K looks good but 40K November down revision and less than expected wage grown, tick up in unemployment level tell that Fed will not hurry with rate hike and this was relief for gold market.

This fundamental uncertainty and indecision also reflects on technical picture. Investors are waiting and keep prices around last major support and around invalidation point of reversal H&S pattern. Step up - and gold will re-establish upside trend, step down - H&S will fail and gold will drop to 1000$. This mostly explains, why current rally is not supported by real money flow.

Right now we can make just some suggestions. As we've said technically recent upward action started in Dec 2015 is first one after long term of decreasing and it should be interrupted by deep retracement sometime. Now this retracement stands in place. It is really big chance that gold stands in a stage of big trend changing from bearish into bullish. US economy shows inflation growing. As we've estimated last week, commodities across the board have turned to growth.

Besides, any Trump protection policy will be accompanied by big spending and expenses, this will lead to grow of inflationary expectations and could lead even to more hawkish Fed policy. Thus, we mostly gravitate to idea that gold now stands not in pause of bear trend, but on the eve of new bull trend. Also we expect big structural shifts in EU economy, diminishing Brussels governing role, taking direction on convergence with Russia economy, and through Russia economical infrastructure - with Middle East and Asia.

But our technical "deep" retracement still could be different. Currently, as market stands at the edge of 1170 Fib support, we could talk on 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...

That's being said gold stands at the area where the bottom of right shoulder should be formed. Thus, our first step on this long-term time frame has been completed - "we suggest further drop on gold, at least to 1160-1180 area."

As we've said almost month ago - we're coming to second step how we've specified it - "watch for validity of H&S pattern." Rally that we see right now is not bad, but it seems that it is lack of confidence a bit, as no big inflows of ETF money stands behind it. That's why also gold has passed solid distance up from 1120 lows we also do not sure that this is indeed the new bull trend already.

Here we come to idea of another reversal pattern. If retracement will be too deep, back to 1000$, gold still will keep chances to reverse up, but by another reversal pattern - Double Bottom.

So, as you can see here we've got big journey ahead while we will estimate what we really have - either H&S or Double Bottom. It means that we should be extra careful to patterns that will be formed on daily chart.

Weekly

Trend is bullish here, but gold is not at OB on weekly chart. Last week we've discussed an idea of possible B&B "Sell" LAL. But last week candle brings new input that makes us to wait with any short position. Actually as last week was rather strong action - gold has erased previously formed bearish reversal candle. And this candle was very important for our B&B pattern. As B&B itself is LAL, not perfectly shaped patter, as now we also has distruction of reversal candle - this makes overall setup not as attractive as it was last week. It means that right now we should deny of idea to go short.

Long-term picture stands the same by far. Bullish crucial point is 1130 lows. Logic is simple here. From perspective of H&S pattern - gold has completed all necessary targets to form right shoulder - downward AB-CD 1.618 extension has been completed and also price has reached 5/8 major Fib support. It means that if gold will drop below this level - it will mean that H&S has failed.

Daily

Daily chart also shows mostly short-term bullish setup. W&R impact was very short-term. Bearish grabber potentially is valid, but market reaction on NFP numbers and fast return back to previous tops mostly suggests attempt of breakout on coming week. Trend has turned bullish on daily chart as well. Gold strongly stands as above MPP as above YPP.

Intraday

On intraday charts it could mean that our initial suggestion was correct - probably gold will try to complete as butterfly as inner AB=CD pattern around 1230 area. This is probably next short-term destination.

upward action could take the shape of minor butterfly on monthly chart. Shape of right wing could change a bit, for example, if gold will test WPP first, but this will not change major idea:

Conclusion:
As market has completed first step of our long term analysis - dropped to 1170 area, now we're turning to second step - estimating of validity of monthly H&S pattern. Currently we still think that gold has fundamental background to start long-term bullish trend and two patterns could be formed. Either H&S or Double bottom. As Januray close was strong - gold keeps good chances to form H&S pattern still.
So, currently we're working with H&S. But starting moment of this bull trend is rather extended.

In shorter term perspective we see some short-term bullish signs that hints on possible further upside continuation, at least to 1230 area on coming week.

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 on Tuesday held slightly below a near three-month high hit in the previous session and the yellow metal was supported by safe-haven demand on the back of rising global political uncertainty.

Spot gold was mostly unchanged at $1,234.30 per ounce at 0610 GMT. In the previous session, the metal touched $1,235.73, its highest since Nov. 11. U.S. gold futures rose 0.4 percent to $1,236.70.

"Gold traded quietly during the Asian trade today, edging marginally lower on light profit-taking, but was able to
consolidate above $1,230 and withstand a recovering U.S. dollar during afternoon hours," MKS PAMP Group trader Sam Laughlin said in a note.

"Participants still look to play on the long side. However, we may see profit-taking push the metal towards the 100-day moving average at $1,220.25," Laughlin added.

The dollar index, which measures the greenback against a basket of currencies, was up 0.2 percent at 100.070. Political uncertainty in the United States has been fuelled by President Donald Trump's policies, the most controversial of which is a temporary ban on entry by people from seven mostly Muslim countries.

Philadelphia Federal Reserve Bank President Patrick Harker on Monday said he would be open to raising interest rates again at the U.S. central bank's March meeting if growth in jobs and wages continues. The Fed raised rates for only the second time since the financial crisis in December, and most Fed policymakers agree with Harker that three more rate hikes this year would be appropriate.

"The prospects of interest rate hikes in the U.S. is more likely than most people expect and there could be one in March," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
"This should drive caution for the gold bulls since with prices rising to the $1,230 range recently, maybe more people are looking forward to the $1,250 range, and there could be some kind of reversal or correction any time soon," he added. \

Spot gold may continue to rise towards a resistance at $1,249 per ounce, as indicated by a Fibonacci retracement analysis, according to Reuters technical analyst Wang Tao.

Gold market continues to confirm our suggestion that situation has changed a week ago and it turns to upside tendency. Yesterday our 1230 target has been hit. SPDR fund storages grows very fast - just for 1 session it has added 4 tonnes. It means that as fundamental as sentiment background is changing and in medium-term perspective we could could on upward contination. Currently it seems that 1255 area could be reached.

At the same time right now gold has completed few intraday targets - butterfly and AB_CD on 4-hour chart, it stends close to MPR1 and daily OB. Thus, odds suggest that bounce down is possible before upward action will continue:

Gold probably will form puny butterfly sell and hit 1236 target + test MPR1 within few hours. This could become a starting point of tecnical retracement. to 1220-1225 area:

That's being, said if you're looking for long position - wait for some bounce down to 1220-1225 area. Although we think that upward action probably will continue - right now is not good point to go short, at least from probability point of view.

 

[Sive Morten]

Good morning,

(Reuters) - Gold on Wednesday held near three-month highs hit the session before, buoyed as political and economic uncertainty in the United States and Europe stoked safe-haven demand.

Spot gold was largely flat at $1,233.06 per ounce by 0616 GMT. On Tuesday, the metal touched its highest since Nov. 11 at $1,235.78. U.S. gold futures were little changed at $1,236.30 an ounce.

"The biggest momentum behind gold is the fact that the U.S. Federal Reserve did not raise rates in the recent meeting, some uncertainties brought by U.S. President Donald Trump's policies and a weaker dollar," said Jiang Shu, chief analyst at Shandong Gold Group.
"Gold prices will continue to rise until mid-February on uncertainties in the U.S. and Europe. But, once January CPI data is released, it will give an idea about the possibility of a rate hike in March," Shu added.

Controversy over Trump's temporary travel ban on people from seven Muslim-majority countries has recently boosted appetite for bullion as a safe-haven asset, while political uncertainty in Europe amid upcoming elections has buoyed the dollar.

"Given the absence of significant data this week, the market's attention may be squarely on politics," HSBC analysts said in a note. "It is likely that at least some gold buying is the result of uncertainty over U.S. policy, but also investor reaction to the possibility that the far-right, eurosceptic candidate in the French presidential election this year, Marine Le Pen, is gaining momentum in the polls."

Investors are concerned that the far right could win France's presidential vote and take it out of the European
Union.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, climbed 1.01 percent to 826.95 tonnes on Tuesday from Monday. Holdings rose for a fifth straight session. The rise in holdings, along with recent data from U.S. Commodity Futures Trading Commission (CFTC), show an increase in
long positions for managed money and a decrease in short holders, MKS PAMP Group trader Alex Thorndike said.

A bullish target at $1,249 per ounce has been temporarily aborted for spot gold and will only be resumed when the metal breaks above resistance at $1,237, according to Reuters technical analyst Wang Tao.

So, gold market again is becoming center of investors' attention as global uncertainty is rising. In US is uncertainty around Trump administration policy and Fed moderately dovish steps. in EU - coming elections turmoil. So, right now we have as technical as sentimental confirmation of existed bullish trend on gold market.
On daily chart market shows pause in upward continuation as it has reached OB and some intraday targets, but still we expect that 1245 target should be hit till the end of the week:

Right now the only question stands is either gold will challenge resistance immediately or show retracement ot 1224 Fib level first. On 4 hour chart although targets have been hit - gold is coiling around them, and has formed bullish grabber, that's why upside action could start without deeper retracement:

Hourly picture shows that minor butterfly has not been completed totally and price consolidates right around WPR1. Also there are some signs of bullish dynamic pressure. So, if gold will keep higher lows tendency here - dynamic pressure will work and gold will continue upward action immediately. While if it will drop below 1230 lows - deeper retracement is possible, at least to 1225 area. Now it seems that first scenario is more probable...

 

[Sive Morten]

Good morning,

(Reuters) - Gold held near 3-month highs on Thursday as political risks from elections in Europe and worries over U.S. President Donald Trump's policies buoyed safe haven demand for the bullion.

Spot gold dipped 0.1 percent to $1,240.46 per ounce at 0243 GMT. On Wednesday, the metal touched its highest since Nov. 11 at $1,244.67. U.S. gold futures rose 0.2 percent to $1,242 an ounce.

"Gold prices will be a little bit rangebound with some upside bias for the next few weeks or so," said OCBC analyst Barnabas Gan." "The risk factors have not really changed so far - we're talking about Donald Trump, we're talking about the political situation in Europe and because of all these factors, we do expect market watchers to stay cautious into the months ahead to gauge how the global economy is going to perform."

Spot gold may edge up to $1,249 per ounce, as it has cleared a resistance at $1,237, according to Reuters technical analyst Wang Tao.

Investors are concerned about the strong showing in the French presidential race of far-right candidate Marine Le Pen, who has promised to take France out of the euro zone and to hold a referendum on European Union membership. Controversy over U.S. President Donald Trump's temporary travel ban on people from seven Muslim-majority countries has recently boosted gold as a safe-haven asset. "Geo-political risks continue to underpin gold in the face of the prospect of higher U.S. interest rates this year," said Jeffrey Halley, senior market analyst at OANDA.

"Increasing hostilities in the Ukraine, Greek bailouts, French elections, Iran-U.S. sabre-rattling have all combined to see investors flee to safe havens, of which gold is the main beneficiary."

The Fed raised rates for only the second time since the financial crisis in December, and most Fed policymakers agree that three more rate hikes this year would be appropriate.

Investors' bullish stance in gold is underpinned by an increase in net longs by speculators and a rise in holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund. SPDR holdings rose 0.68 percent to 832.58 tonnes on Wednesday from Tuesday, rising for a sixth straight session.

So, Gold market right now looks strong, rally stands on very good background - EU elections tumoil will come as soon as on March, hazard of Fed hiking was postponed at least till June, lack of transparency around Trump administration steps - also support demand for safe haven assets.
Thus, our 1145 target has been achieved. Next short-term destination point stands around 1255 daily Fib resistance:

But before market will continue action up - it could show minor bounce. On 4-hour chart butterfly has been completed, price also stands around MPR1 and at least minor 30% retracement is possible - 1220-1225 area. ALso pay attention that our AB=CD pattern 1.618 extension create an Agreement with daily Fib level...

As on hourly market gold stands in channel - it keeps harmonic retracements very well. Thus, today it could start another one and it's target points on the same 1225 area:

THat's being said, it might happen of course, that gold will just break this channel up, we do not know. But odds suggest retracement at least to 1220-1225 area. Thus, if you're looking for long entry - think about this range. Currently it is not best location to take a position...

 

[Sive Morten]

Good morning,

(Reuters) - Gold fell on Friday on a firmer dollar after U.S. President Donald Trump promised a major tax
announcement and as economic data boosted expectations of a U.S. rate hike.

Spot gold was down 0.4 percent at $1,225.42 per ounce by 0326 GMT. On Wednesday, it touched its highest since Nov. 11 at $1,244.67. U.S. gold futures dropped as much as over 1 percent to $1,223.30 an ounce.

"The reversal (in prices) was almost entirely due to the surge in the dollar that took place after President Trump revealed he had a 'phenomenal' tax plan ready for unveiling in a few weeks’ time," said INTL FCStone analyst Edward Meir.

Trump plans to announce the most ambitious tax reform plan since the Reagan era in the next few weeks, the White House said on Thursday, sending stock prices and the dollar higher on hopes for a cut in corporate tax rates.

"Thursday’s trading showed us that (investors) were enamoured more by Trump’s general announcement and have not yet bothered to focus on the fine print," Meir said, adding the selloff in gold could be somewhat premature and could reverse course.

U.S. economic data also underpinned the dollar. Initial jobless claims unexpectedly dropped last week to a nearly 43-year low, while inventories at wholesalers surged in December for a second straight month.
The dollar index was firm at 100.600. The dollar extended its overnight rally and edged up to a nine-day high of 113.79 yen Chicago Federal Reserve President Charles Evans, a voter on policy this year, told reporters it is reasonable to expect the Fed to raise rates three times this year.

However, St. Louis Fed President James Bullard said interest rates could likely remain low through at least 2017, with no clear sense yet of whether the Trump administration's policies will spark higher inflation or growth.

Gold is highly-sensitive to rising U.S. rates, which increase the opportunity cost of holding non-yielding bullion
while boosting the dollar, in which it is priced. "We continue to expect gold to remain supported in the first
half of 2017, on the back of risk aversion and global uncertainties," said OCBC analyst Barnabas Gan.
"We continue to place Trump-centric concerns as one of the top concerns on our radar, given the uncertainty surrounding his policies."

Spot gold may test support at $1,218 per ounce, a break below which could open the way towards the next support at $1,182, according to Reuters technical analyst Wang Tao.

As gold is returned back under technical rules, our work becomes a bit easier here, since market logically response on patterns and other technical tools. Thus, our suggestion on retracement was correct and gold has formed nice bearish engulfing pattern at precise area:

Appearing of engulfing suggests a bit deeper retracement, as price could take the shape of intraday AB=CD pattern. Still we will watch for bullish grabber today, as it still could change situation and bring some confidence that price will continue to 1255 next week.

On intraday chart you see reaction on butterfly completion. Today gold should reach 1215-1220 K-support. Then we expect upside bounce. But what a kind of bounce it will be - either just reaction on support and BC leg of larger AB=CD pattern, or upside continuation if grabber will appear - currently we can't say definitely.

Still expectation of action 1215-1220 area and upside reversal is enough program for today's session...