Sive Morten
Special Consultant to the FPA
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Fundamentals
Gold was standing last week in the common trend, showing healthy reactions on the same fundamental factors, such as CPI. But once geopolitics has intruded - the market has got a special boost while others were depressed. This is the advantage of the gold that we've mentioned last week when we said that geopolitics comes on the first stage and nothing is over yet. I would say nothing is even started yet.
Market overview
Gold prices climbed to a more than one-week high on Monday, supported by inflation worries and lingering geopolitical risks, as markets awaited key U.S. inflation data for cues on the Federal Reserve's interest rate hike trajectory. Benchmark 10-year U.S. Treasury yields hovered near their highest levels since December 2019 after an upbeat U.S. employment report on Friday.
Gold and silver prices were boosted in part by a U.S. dollar index that has dropped sharply from its late-January high, Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note. Meanwhile, speculators cut their net long COMEX gold position in the week to Feb. 1, data showed on Friday.
Gold prices touched their highest level in two weeks on Thursday, supported by a weaker dollar and as data showing a spike in U.S. consumer prices boosted the metal's appeal as a hedge against inflation. Spot gold prices fell as much as 0.6% after hotter-than-expected U.S. inflation data supported the case for an aggressive rate hike.
Data showed the CPI index gained 0.6% last month after increasing 0.6% in December. In the 12 months through January, the CPI jumped 7.5%, the biggest year-on-year increase since February 1982. Economists had forecast a 7.3% increase. Federal funds rate futures increased the chances of a half percentage-point tightening by the U.S. Federal Reserve at next month's policy meeting following the data.
U.S. President Joe Biden said the January consumer price index report issued on Thursday was a reminder the budgets of Americans are under real strain, adding that his administration was using "every tool" it has to tackle the issue.
Federal funds rate futures on Thursday have boosted the chances of a half percentage-point tightening by the Federal Reserve at next month's meeting after hawkish comments from St. Louis Fed President James Bullard and following hotter-than-expected U.S. consumer prices data for January.
In late afternoon trading, rate futures showed a 62% chance that the Fed will raise interest rates by 50 basis points in March following Bullard's remarks, from a 30% chance late on Wednesday. For the year, futures have priced in 164 basis points of policy tightening. Other metrics such as the CME FedWatch tool showed a 95% probability of a 50 basis point hike in March.
Bullard, a voter on the Federal Open Market Committee this year, told Bloomberg on Thursday he has become "dramatically" more hawkish in light of the hottest inflation reading in nearly 40 years. He now wants a full percentage point of interest rate hikes over the next three U.S. central bank policy meetings. Bullard in his comments said he did not think such a move would be a "shock and awe" approach but rather a "sensible response" to the unexpected inflation shock.
Some analysts, however, believe the Fed will maintain a gradual approach in tightening monetary policy despite higher-than-expected inflation. Not all economists believe the Fed would move so aggressively on its first rate hike as it would stifle economic growth. Many expect the central bank to raise rates by 25 basis points at least seven times this year.
Excluding the volatile food and energy components, the CPI increased 0.6% last month, matching December's rise. It was the seventh time in the last 10 months that the so-called core CPI has increased at least 0.5%.
In a blog, ActionEconomics noted that Bullard has a "very hawkish reputation and has often been on the fringe," adding it would monitor further comments from other Fed officials.
Following the inflation data, the yield on the U.S. benchmark 10-year note hit 2% for the first time in 2-1/2 years, rising as high as 2.056%. It was last at 2.0539%. The U.S. 2-year/10-year yield gap flattened to 43.7 basis points, the tightest spread since August 2020, as traders priced in hikes that should push short-term rates higher.
Barclays in a research note on Thursday said it has revised its Fed hike forecast this year to five rate increases from three.
The bank added that its new policy forecast implied an end to the tightening cycle in mid-2023, with a terminal target range for the fed funds rate of 1.75-2.0%. That was 25 basis points higher and six months sooner, Barclays said.
Yesterday we also have taken an in-depth view on the position of big banks, concerning this question. And many banks suppose a 0.5% hike in March.
High inflation, which has overshot the Fed's 2% target, could imperil Biden's economic agenda. Biden in a statement acknowledged the hardships American families are facing, but noted that "there are also signs that we will make it through this challenge." He was alluding to the unchanged reading in the prices of motor vehicles, one of the major drivers of inflation.
Still, high inflation will persist for a while, reflecting the delayed impact of rising wages. Employers are boosting compensation as they compete for scarce workers. There were 10.9 million job openings at the end of December.
Wage gains are being wiped out by inflation. Average weekly earnings adjusted for inflation fell 3.1% in January from a year earlier. According to economists at Moody's Analytics, inflation was costing the average household over $250 per month.
Gold prices jumped on Friday to a near two-month peak as concerns over surging inflation and escalating tensions between Russia and NATO lifted demand for the safe-haven metal. A Russian - NATO clash could begin any day now and would likely start with an air assault, White House national security adviser Jake Sullivan said on Friday.
The rising geopolitical tensions accelerated a selloff on Wall Street. U.S. equities had declined in the previous session after data showed the biggest annual increase in consumer prices in 40 years, increasing pressure on the Fed to aggressively raise interest rates.
US artificial supply bottlenecks strategy
China’s economy expanded by an impressive-looking 8.1% in 2021, according to official data. This came after growth of just 2.2% in 2020 amid the onset of COVID-19, and an average of 7.7% in the previous decade. Headlines can be deceiving, however. Strong growth last year was largely a result of highly favourable statistical carry-over effects – quarterly annualised growth averaged just 4% in 2021. The year-on-year pace of growth also slowed sharply in the second half of the year. Fathom’s China Momentum Indicator, which is our estimate of China’s true underlying growth rate, has also slowed sharply. Unless there is a material change in policy, away from Xi’s ‘jam today’ approach, we believe China is headed for Japanification.
Various factors have been weighing on the economy. Key have been the government’s draconian zero-COVID strategy and the intensification of the Evergrande crisis, which have had large negative impacts on the consumer and the housing market. Nominal retail sales growth slowed to just 1.7% on a twelve-month basis in December, while in the fourth quarter the floor area of residential buildings started and sold was 30% and 20% lower respectively than the year before.
Beijing’s concerns about the economy’s weakness seemed to intensify towards the end of last year, and economic stability was a key theme of the government’s annual Central Economic Work Conference in December. The People’s Bank of China has recently eased policy, and special bond quotas were issued to local governments in December which will be used to boost infrastructure spending over coming months. Further policy easing is likely, including measures to stabilise the housing market.
Looking beyond 2022, investors should brace themselves for much slower growth in China over the coming decade. Its policymakers face the unenviable challenge of reducing the risks associated with an over-inflated housing market while avoiding a sharp slowdown. Moreover, their ability to keep stimulating growth is limited by elevated, economy-wide debt levels. Ultimately, rebalancing and unwinding the excesses of the past is hard to do. It requires short-term pain for long-term gain, which typically proves too unpalatable.
Meanwhile, Beijing’s unpredictable and aggressive regulatory measures against key parts of the private sector in recent years, its increasing penchant for state control, and frayed relations with the West, are likely to weigh on domestic innovation. These potential headwinds to productivity growth from weaker innovation will occur at a time when demographics are becoming decidedly less favourable. As the chart highlights, China is growing old before it grows rich, with its old-age dependency ratio rising at a much lower standard of living than elsewhere.
All in all, Fathom believes that China is headed towards Japanification — characterised by weak growth, low inflation and low interest rates. Hence, we continue to favour government bonds as the most attractive.
The Biden administration is considering a new China tariff probe if talks fail to persuade Beijing to follow through on promised purchases of U.S. goods, energy, and services, officials from the largest U.S. business lobbying group said on Wednesday. The administration is also considering other options, including working more closely with U.S. allies to present a united front to China in demanding a level playing field for international firms, Myron Brilliant, the U.S. Chamber of Commerce's head of international affairs, told reporters.
China met less than 60% of its purchasing goal, failing to make good on its promise to increase U.S. purchases by $200 billion above 2017 levels during 2020 and 2021 - a two-year period disrupted by the COVID-19 pandemic and supply chain bottlenecks. Asked about the "Phase 1" deal on Thursday, China's commerce ministry spokesman Gao Feng said the United States should cancel tariffs on China in order to create a favorable environment for trade cooperation.
U.S. officials called on Monday for "concrete action" from China to make good on its commitment to purchase $200 billion in additional U.S. goods and services in 2020 and 2021 under the "Phase 1" trade deal signed by former President Donald Trump. The officials said Washington was losing patience with Beijing, which had "not shown real signs" in recent months that it would close the gap in the two-year purchase commitments that expired at the end of 2021.
The European Commission has proposed adding shipping to the bloc's carbon market for the first time, in a move that is set to shake up the industry after years of avoiding pollution charges by the bloc. With about 90% of world trade transported by sea, shipping accounts for nearly 3% of the world's CO2 emissions.
Environmental campaigners say efforts by the industry to cut emissions are too slow and that including shipping in the European Union Emissions Trading System (ETS) will speed up decarbonization. Prices for permits in the scheme are nearing 100 euros ($114.44) a tonne, a level analysts say will spur further investment in low-carbon energy sources.
COT Report
Last week's net long position has increased moderately, with the participation as speculators as hedgers. Open interest has increased as well:
The bottom line
Yesterday, guys, we have an in-depth discussion concerning as new financial environment as some most critical geopolitical moments. So, it would be nice, if you read at least the "Conclusion" part of the FX market report, just to better understand what is going on. Here I would say shortly. Financial factors stand against Gold appreciation. With the rising of nominal yields above 2% and real rates as well and more and more anticipated 0.5% rate hike right in March, it is difficult to expect the gold rally. Thus if we would have just a financial component, I would focus on downside continuation. Besides, I'm not sure that we get a 0.5% rate hike just once this year.
Eventually, we have two other major components that have a direct relation to the US economy performance in long term. Trade war against China by applying Trump "Stage 1" agreement, import tariffs, and pandemic-based artificial supply bottleneck chains start making a negative impact on the Chinese economy. But the vital, breakeven point is not reached yet. This pressure should stay for longer. But this trade war feeds the inflation inside the US as well and any attempt of the Fed to control it by rate hike sooner or later leads to hurt of the US economic growth. Just because you can't simultaneously add fuel and put out the fire. It might happen that Fed always will be one step back behind inflation and with the rates above 1.5% the negative impact on the economy could become feasible, which supports the gold price.
We expect even more concern from geopolitics. You already could see the effect on Friday's action when gold totally ignores any bearish financial factors. But the fun has just begun, or better to say not even begins yet. The current market view on supposed Russia-NATO contradictions and tensions looks short-vision and naive. Investors mostly treat it in a way of Lybia and Iraq as it happens somewhere far away and is only heard in paper headlines. We disagree. First of all, these tensions are long-term, as we've warned about it. The way how they go will be absolutely unexpected and not in a way how papers and media suppose it to be. The conflict definitely makes a real, physical impact on NATO countries in the EU, including the UK, and with a high probability the US either. Not virtually, not verbally but physically. As a result, whatever it will be, the dollar loses the major part of its value and safe-haven status, as well as other paper currencies, and gold should shine bright. Even with the smooth undercover conflict that will be hidden from the public (something like in Syria), the dollar starts losing its value. So, if you want to invest in safe haven - ignore the yen, franc, dollar, or whatever - just buy gold.
Initially, we had all the same conclusions but decided to wait for a deeper drop of the gold under the impact of fiscal Fed measures. Now, despite the core of our view remaining the same, the geopolitical spiral starts to spin up, it might happen that no significantly deeper action happens. At least it is difficult to forecast factors that are totally out of the control.
Technicals
Monthly
On Friday we've got the action that has made the effect even on the monthly chart. In fact, here we have two major issues. First is, market moves above January top, and second - price returns back above the YPP after initial testing and pullback. This action makes signs of bullish dynamic pressure here brighter, and from a short-term perspective, we should keep an eye on challenging 1875 and 1910$ tops.
Weekly
Under the impact of geopolitical factors, the gold market totally erased bearish patterns - the reversal bar was canceled and the MACD trend has turned bullish. As we have multiple bullish grabbers, mentioned previously now we could focus on its target - 1875$ top. It is easy to set multiple upside targets, that point even on higher objects - 1910$ and above. Bullish invalidation point mostly remains the same around 1760$ area:
Daily
As we've said on Friday - the erasing of the H&S pattern gets the special meaning for the daily time frame, suggesting further and strong upward continuation. In fact gold has no significant Fib levels above and the only overbought level becomes the technical barrier. Here we set the most near standing targets. It seems that testing of 1875$ top is a question of time and the next nearest destination point is 1910$ - the 1.27 butterfly extension. Trend here stands bullish as well.
Intraday
As upward action just accelerates - the market should not show too deep retracement. Taking into consideration the overbought level, it seems that 1835 area is the most probable destination of the pullback:
Gold was standing last week in the common trend, showing healthy reactions on the same fundamental factors, such as CPI. But once geopolitics has intruded - the market has got a special boost while others were depressed. This is the advantage of the gold that we've mentioned last week when we said that geopolitics comes on the first stage and nothing is over yet. I would say nothing is even started yet.
Market overview
Gold prices climbed to a more than one-week high on Monday, supported by inflation worries and lingering geopolitical risks, as markets awaited key U.S. inflation data for cues on the Federal Reserve's interest rate hike trajectory. Benchmark 10-year U.S. Treasury yields hovered near their highest levels since December 2019 after an upbeat U.S. employment report on Friday.
Gold and silver prices were boosted in part by a U.S. dollar index that has dropped sharply from its late-January high, Jim Wyckoff, senior analyst at Kitco Metals, wrote in a note. Meanwhile, speculators cut their net long COMEX gold position in the week to Feb. 1, data showed on Friday.
Gold prices touched their highest level in two weeks on Thursday, supported by a weaker dollar and as data showing a spike in U.S. consumer prices boosted the metal's appeal as a hedge against inflation. Spot gold prices fell as much as 0.6% after hotter-than-expected U.S. inflation data supported the case for an aggressive rate hike.
Data showed the CPI index gained 0.6% last month after increasing 0.6% in December. In the 12 months through January, the CPI jumped 7.5%, the biggest year-on-year increase since February 1982. Economists had forecast a 7.3% increase. Federal funds rate futures increased the chances of a half percentage-point tightening by the U.S. Federal Reserve at next month's policy meeting following the data.
U.S. President Joe Biden said the January consumer price index report issued on Thursday was a reminder the budgets of Americans are under real strain, adding that his administration was using "every tool" it has to tackle the issue.
Federal funds rate futures on Thursday have boosted the chances of a half percentage-point tightening by the Federal Reserve at next month's meeting after hawkish comments from St. Louis Fed President James Bullard and following hotter-than-expected U.S. consumer prices data for January.
In late afternoon trading, rate futures showed a 62% chance that the Fed will raise interest rates by 50 basis points in March following Bullard's remarks, from a 30% chance late on Wednesday. For the year, futures have priced in 164 basis points of policy tightening. Other metrics such as the CME FedWatch tool showed a 95% probability of a 50 basis point hike in March.
Bullard, a voter on the Federal Open Market Committee this year, told Bloomberg on Thursday he has become "dramatically" more hawkish in light of the hottest inflation reading in nearly 40 years. He now wants a full percentage point of interest rate hikes over the next three U.S. central bank policy meetings. Bullard in his comments said he did not think such a move would be a "shock and awe" approach but rather a "sensible response" to the unexpected inflation shock.
Some analysts, however, believe the Fed will maintain a gradual approach in tightening monetary policy despite higher-than-expected inflation. Not all economists believe the Fed would move so aggressively on its first rate hike as it would stifle economic growth. Many expect the central bank to raise rates by 25 basis points at least seven times this year.
Excluding the volatile food and energy components, the CPI increased 0.6% last month, matching December's rise. It was the seventh time in the last 10 months that the so-called core CPI has increased at least 0.5%.
In a blog, ActionEconomics noted that Bullard has a "very hawkish reputation and has often been on the fringe," adding it would monitor further comments from other Fed officials.
Following the inflation data, the yield on the U.S. benchmark 10-year note hit 2% for the first time in 2-1/2 years, rising as high as 2.056%. It was last at 2.0539%. The U.S. 2-year/10-year yield gap flattened to 43.7 basis points, the tightest spread since August 2020, as traders priced in hikes that should push short-term rates higher.
Barclays in a research note on Thursday said it has revised its Fed hike forecast this year to five rate increases from three.
The bank added that its new policy forecast implied an end to the tightening cycle in mid-2023, with a terminal target range for the fed funds rate of 1.75-2.0%. That was 25 basis points higher and six months sooner, Barclays said.
Yesterday we also have taken an in-depth view on the position of big banks, concerning this question. And many banks suppose a 0.5% hike in March.
High inflation, which has overshot the Fed's 2% target, could imperil Biden's economic agenda. Biden in a statement acknowledged the hardships American families are facing, but noted that "there are also signs that we will make it through this challenge." He was alluding to the unchanged reading in the prices of motor vehicles, one of the major drivers of inflation.
Still, high inflation will persist for a while, reflecting the delayed impact of rising wages. Employers are boosting compensation as they compete for scarce workers. There were 10.9 million job openings at the end of December.
Wage gains are being wiped out by inflation. Average weekly earnings adjusted for inflation fell 3.1% in January from a year earlier. According to economists at Moody's Analytics, inflation was costing the average household over $250 per month.
Gold prices jumped on Friday to a near two-month peak as concerns over surging inflation and escalating tensions between Russia and NATO lifted demand for the safe-haven metal. A Russian - NATO clash could begin any day now and would likely start with an air assault, White House national security adviser Jake Sullivan said on Friday.
The rising geopolitical tensions accelerated a selloff on Wall Street. U.S. equities had declined in the previous session after data showed the biggest annual increase in consumer prices in 40 years, increasing pressure on the Fed to aggressively raise interest rates.
US artificial supply bottlenecks strategy
China’s economy expanded by an impressive-looking 8.1% in 2021, according to official data. This came after growth of just 2.2% in 2020 amid the onset of COVID-19, and an average of 7.7% in the previous decade. Headlines can be deceiving, however. Strong growth last year was largely a result of highly favourable statistical carry-over effects – quarterly annualised growth averaged just 4% in 2021. The year-on-year pace of growth also slowed sharply in the second half of the year. Fathom’s China Momentum Indicator, which is our estimate of China’s true underlying growth rate, has also slowed sharply. Unless there is a material change in policy, away from Xi’s ‘jam today’ approach, we believe China is headed for Japanification.
Various factors have been weighing on the economy. Key have been the government’s draconian zero-COVID strategy and the intensification of the Evergrande crisis, which have had large negative impacts on the consumer and the housing market. Nominal retail sales growth slowed to just 1.7% on a twelve-month basis in December, while in the fourth quarter the floor area of residential buildings started and sold was 30% and 20% lower respectively than the year before.
Beijing’s concerns about the economy’s weakness seemed to intensify towards the end of last year, and economic stability was a key theme of the government’s annual Central Economic Work Conference in December. The People’s Bank of China has recently eased policy, and special bond quotas were issued to local governments in December which will be used to boost infrastructure spending over coming months. Further policy easing is likely, including measures to stabilise the housing market.
Looking beyond 2022, investors should brace themselves for much slower growth in China over the coming decade. Its policymakers face the unenviable challenge of reducing the risks associated with an over-inflated housing market while avoiding a sharp slowdown. Moreover, their ability to keep stimulating growth is limited by elevated, economy-wide debt levels. Ultimately, rebalancing and unwinding the excesses of the past is hard to do. It requires short-term pain for long-term gain, which typically proves too unpalatable.
Meanwhile, Beijing’s unpredictable and aggressive regulatory measures against key parts of the private sector in recent years, its increasing penchant for state control, and frayed relations with the West, are likely to weigh on domestic innovation. These potential headwinds to productivity growth from weaker innovation will occur at a time when demographics are becoming decidedly less favourable. As the chart highlights, China is growing old before it grows rich, with its old-age dependency ratio rising at a much lower standard of living than elsewhere.
All in all, Fathom believes that China is headed towards Japanification — characterised by weak growth, low inflation and low interest rates. Hence, we continue to favour government bonds as the most attractive.
The Biden administration is considering a new China tariff probe if talks fail to persuade Beijing to follow through on promised purchases of U.S. goods, energy, and services, officials from the largest U.S. business lobbying group said on Wednesday. The administration is also considering other options, including working more closely with U.S. allies to present a united front to China in demanding a level playing field for international firms, Myron Brilliant, the U.S. Chamber of Commerce's head of international affairs, told reporters.
China met less than 60% of its purchasing goal, failing to make good on its promise to increase U.S. purchases by $200 billion above 2017 levels during 2020 and 2021 - a two-year period disrupted by the COVID-19 pandemic and supply chain bottlenecks. Asked about the "Phase 1" deal on Thursday, China's commerce ministry spokesman Gao Feng said the United States should cancel tariffs on China in order to create a favorable environment for trade cooperation.
U.S. officials called on Monday for "concrete action" from China to make good on its commitment to purchase $200 billion in additional U.S. goods and services in 2020 and 2021 under the "Phase 1" trade deal signed by former President Donald Trump. The officials said Washington was losing patience with Beijing, which had "not shown real signs" in recent months that it would close the gap in the two-year purchase commitments that expired at the end of 2021.
The European Commission has proposed adding shipping to the bloc's carbon market for the first time, in a move that is set to shake up the industry after years of avoiding pollution charges by the bloc. With about 90% of world trade transported by sea, shipping accounts for nearly 3% of the world's CO2 emissions.
Environmental campaigners say efforts by the industry to cut emissions are too slow and that including shipping in the European Union Emissions Trading System (ETS) will speed up decarbonization. Prices for permits in the scheme are nearing 100 euros ($114.44) a tonne, a level analysts say will spur further investment in low-carbon energy sources.
COT Report
Last week's net long position has increased moderately, with the participation as speculators as hedgers. Open interest has increased as well:
The bottom line
Yesterday, guys, we have an in-depth discussion concerning as new financial environment as some most critical geopolitical moments. So, it would be nice, if you read at least the "Conclusion" part of the FX market report, just to better understand what is going on. Here I would say shortly. Financial factors stand against Gold appreciation. With the rising of nominal yields above 2% and real rates as well and more and more anticipated 0.5% rate hike right in March, it is difficult to expect the gold rally. Thus if we would have just a financial component, I would focus on downside continuation. Besides, I'm not sure that we get a 0.5% rate hike just once this year.
Eventually, we have two other major components that have a direct relation to the US economy performance in long term. Trade war against China by applying Trump "Stage 1" agreement, import tariffs, and pandemic-based artificial supply bottleneck chains start making a negative impact on the Chinese economy. But the vital, breakeven point is not reached yet. This pressure should stay for longer. But this trade war feeds the inflation inside the US as well and any attempt of the Fed to control it by rate hike sooner or later leads to hurt of the US economic growth. Just because you can't simultaneously add fuel and put out the fire. It might happen that Fed always will be one step back behind inflation and with the rates above 1.5% the negative impact on the economy could become feasible, which supports the gold price.
We expect even more concern from geopolitics. You already could see the effect on Friday's action when gold totally ignores any bearish financial factors. But the fun has just begun, or better to say not even begins yet. The current market view on supposed Russia-NATO contradictions and tensions looks short-vision and naive. Investors mostly treat it in a way of Lybia and Iraq as it happens somewhere far away and is only heard in paper headlines. We disagree. First of all, these tensions are long-term, as we've warned about it. The way how they go will be absolutely unexpected and not in a way how papers and media suppose it to be. The conflict definitely makes a real, physical impact on NATO countries in the EU, including the UK, and with a high probability the US either. Not virtually, not verbally but physically. As a result, whatever it will be, the dollar loses the major part of its value and safe-haven status, as well as other paper currencies, and gold should shine bright. Even with the smooth undercover conflict that will be hidden from the public (something like in Syria), the dollar starts losing its value. So, if you want to invest in safe haven - ignore the yen, franc, dollar, or whatever - just buy gold.
Initially, we had all the same conclusions but decided to wait for a deeper drop of the gold under the impact of fiscal Fed measures. Now, despite the core of our view remaining the same, the geopolitical spiral starts to spin up, it might happen that no significantly deeper action happens. At least it is difficult to forecast factors that are totally out of the control.
Technicals
Monthly
On Friday we've got the action that has made the effect even on the monthly chart. In fact, here we have two major issues. First is, market moves above January top, and second - price returns back above the YPP after initial testing and pullback. This action makes signs of bullish dynamic pressure here brighter, and from a short-term perspective, we should keep an eye on challenging 1875 and 1910$ tops.
Weekly
Under the impact of geopolitical factors, the gold market totally erased bearish patterns - the reversal bar was canceled and the MACD trend has turned bullish. As we have multiple bullish grabbers, mentioned previously now we could focus on its target - 1875$ top. It is easy to set multiple upside targets, that point even on higher objects - 1910$ and above. Bullish invalidation point mostly remains the same around 1760$ area:
Daily
As we've said on Friday - the erasing of the H&S pattern gets the special meaning for the daily time frame, suggesting further and strong upward continuation. In fact gold has no significant Fib levels above and the only overbought level becomes the technical barrier. Here we set the most near standing targets. It seems that testing of 1875$ top is a question of time and the next nearest destination point is 1910$ - the 1.27 butterfly extension. Trend here stands bullish as well.
Intraday
As upward action just accelerates - the market should not show too deep retracement. Taking into consideration the overbought level, it seems that 1835 area is the most probable destination of the pullback:
))
