GOLD PRO Weekly June 01-05, 2015

[Sive Morten]

Fundamentals

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

Reuters reports Gold edged up on Friday from the previous day's 2-1/2-week low, supported by a softer dollar and uncertainty over Greece's debt talks, but remained under pressure from expectations U.S. interest rates might rise soon.

The prospect of higher rates, which would boost the opportunity cost of holding non-yielding gold while lifting the dollar, kept the metal on track for a second weekly drop.
"The gold market will eventually have to discount the fact that the Fed is not going to put through a series of rate hikes, one after the other, but will rather just put in one in and wait," said Edward Meir, INTL FCStone analyst.

"If it does that, I think the market should respond by moving a bit higher. In the meantime, we're in this drift doing nothing."
The greenback's weakness came after rallying nearly 3 percent after Federal Reserve Chair Janet Yellen said last week that the U.S. central bank was on track to raise rates later this year.

"The recent surge in the dollar, which pushed crude oil prices lower, has put pressure on gold," ING commodities analyst Hamza Khan said.

There were mixed signals this week on the outcome of talks over Greece's debt, without which Athens risks default or bankruptcy in weeks.

Greek government spokesman said on Thursday that it intended to agree a cash-for-reforms deal by Sunday. Euro zone officials suggested, though, that a deal was far from imminent, and the head of the International Monetary Fund was quoted as saying Greece could fall out of the euro zone.

"While gold hasn't gained much of an upside (from the uncertainty over Greece) ... it hasn't seen much of a downside, given the resurgence of the dollar," Standard Chartered's global head of commodities research Paul Horsnall said.

Dealers noted quiet gold trading overnight in Asia, the metal's main physical markets, where premiums in major trading centers failed to rise this week despite the price drop.
Our suspicions on upside jump in CFTC data have been confirmed. Last week COT report shows huge drop in open interest and net long position. At the same time, speculative shorts are up for 7K. Hedgers also show massive out from gold, but more shorts were closed. As hedgers take counter-trend position, it means that they assess upside reversal as not very probable right now.
SPDR fund has not shown any strong outflow, storages are down just for 3 tonnes to 715 tonnes of gold, this is not very significant weekly drop. Still, this is definitely not an increasing of position and in general confirms dynamic of COT report. This is warning for us that any long position right now will be under pressure, fragile and carries great risk.

Summary:

Technicals
Monthly
Last week shows no impact on monthly chart. Gold stands rather flat on monthly chart within second month in a row. But between April standing and May standing is big difference. In May investors are coming to action, at least, CFTC data shows the signs of it, while in April CFTC was absolutely anemic and market was driven by technical and news flows. So, this lets us hope that we will see some acceleration soon
Whether recent jump has harmed any of our long-term patterns? Not yet. As bearish dynamic pressure as VOB pattern are still valid.
On long-term horizon we still have last big pattern in progress that is Volatility breakout (VOB). It suggests at least 0.618 AB-CD down. And this target is 1050$. At the same time we need 1130 breakout to start clearly speak on 1050 target.
But what action market should show to break huge bearish patterns on monthly? Dynamic pressure is a tendency of lower highs within bullish trend. Hence, to break it, market should show higher high. I’ve marked it with arrow. It means that market should take out 1308 top to break this pattern and make investors doubt on bearish perspectives of gold market in long term. That’s why action that we have on daily and intraday charts right now is not an action of monthly one yet. Early bell of changing situation could be moving above YPP.
Overall picture still remains mostly bearish. In the beginning of the year market showed solid upside action. Gold was able to exceed yearly pivot, passed half way to Yearly Pivot resistance 1 but right now has reversed down and closed below YPP. From technical point of view this is bearish sign. This could be very significant moment and next logical destination will be yearly pivot support 1 around 1083$.
Currently, despite rare upside splashes in CFTC data, we couldn’t say yet that situation has changed drastically. We need to get few weeks of net long position increasing, to get positive dynamic on SPDR storages to get confidence with upside action. Other words, we need to get some proves that recent changes is not occasion, as it has happened recently.
Still right now gold mostly is hostage of dollar value and US economical data (mostly inflation) in nearest perspective. Approximately the same was announced by Fed in forecast on inflation and had become a reason of dovish approach to rate hiking. Another concern right now is too strong dollar that becomes a problem per se for economy growth and kills inflation. Prices are fallen so no needs to hike rates. So, after positive CPI report investors will wait for June Fed meeting and NFP on coming week.
If we will take into consideration geopolitical situation and risks that have appeared recently, it could happen that situation will change, especially if situation in Ukraine will escalate and peaceful regulation will fail. Day by day we see worrying geopolitical news – Macedonia, Yemen to name some. Unfortunately the geopolicy is sphere where we can’t do much.
That’s being said, as gold has passed through 1200 and until it stands below 1308 top, our long-term next destination point is previous lows at 1130, but since gold is returning to 1130 for second time – this is temporal destination and we should prepare for further downward action. Current upside action we should treat as retracement, although it could be really significant on lower time frames.

Weekly
Right now trend on weekly chart has shifted bullish, grabbers were vanished, but is it really shift long-term view on weekly chart? Although trend has turned bullish three weeks ago, market does not show any upside acceleration, mostly stands flat and even decreasing in last two weeks. Such action easily could take the shape of bearish dynamic pressure.
Recently market has passed through long-term natural support/resitsance level (marked with circles) but last week has returned right back down. Market has not even completed AB-CD pattern with destination point will be around 1230-1250 level. In general, this is the sign of weakness, when market can’t complete AB-CD target. It has approximately the same meaning as market can’t reach the border of triangle and turns in opposite direction.
Anyway if even gold will form 1.618 AB-CD up, it will remain below 1308. This will be second barier, and currently it is very difficult to say whether gold will be able to pass through them.
At the same time here we get the clue. We know that retracement will be just till 1298 area, hence any action above it will not be retracement any more. Thus, around this level we will understand whether long-term picture has changed or not.
Meantime, as you can see even 1.618 AB=CD will not destroy butterfly shape and keep valid long-term bearish scenario. That’s why current action is nice and probably tradable on lower charts but here as well as on monthly it does not change situation yet.

Daily
Trend is bearish here. As you can see market stands flat within recent 3 days and right now we just can repeat thoughts that already have been said. As market has formed consolidation and tried to break out of it, any return back will have opposite direction. It means that failure upside breakout of the flag and price returning inside of it should be treated as bearish sign. According to classic technical analysis in such situations market at least shows action to opposite border of the pattern and very often passes 2 times distance after breakout in opposite side.
Thus, taking in consideration all issues that we’ve discussed above – CFTC, bearish patterns it seems that currently it is difficult to find any reasons for going long here, except may be very short-term scalp trading. Still, we can’t exclude that market could turn to some fluctuations due expectation of important NFP data and Fed meeting later in the month. During this coiling market probably will test new June Pivot point @ 1197.

4-hour
Trend is bullish here. Gold has completed steep AB-CD pattern by forming nicely looking bullish engulfing pattern. As we probably will have some news vacuum (except Greece may be), gold could turn to short-term upside retracement. As we’ve estimated on Friday, the most probable target of it stands around 1195 area that is very close to new MPP and K-resistance around 1200. Theoretically market should not go higher if nothing drastical will happen. If you will take a look at hourly chart as well, you’ll see that price action itself has no signs of thrust, very choppy and mostly corresponds to retracement action.

Conclusion:
Long-term picture remains bearish and major patterns stand mostly intact.
On short-term charts market gold stands at support. As important data will come only at the end of the week, market could get some freedom and turn to wider fluctuations. As result, we can’t exclude possibility of reaching MPP and 1200 K-resistance area. Theoretically market should not go higher if nothing drastical will happen.

The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Sive Morten]

Gold Daily Update Tue 02, June 2015

Good morning,


Reuters reports today Gold held firm below $1,200 an ounce on Tuesday as the dollar climbed to a fresh 12-1/2-year peak against the yen and strong U.S. economic data supported expectations of a Federal Reserve rate hike later this year.

Gold initially rose in the prior session after U.S. consumer spending growth unexpectedly stalled in April, but gave up those gains after data showed manufacturing activity picked up in May for the first time in seven months and construction spending surged in April to a near 6-1/2-year high.

The data kept alive expectations the Fed will hike U.S. interest rates later this year from record lows, boosting the dollar. Higher rates would reduce demand for non-interest-paying bullion.

"The lack of follow-through buying after clearing $1,200 is a worrying sign for the yellow metal and it looks again likely to test a break lower through the broad $1,180 to $1,185 support range," said MKS Group trader Sam Laughlin.

The precious metals group has been hit by a surge in the dollar, an investor favourite due to the prospects of higher U.S. interest rates.

The dollar rose above 125 yen on Tuesday for the first time since late 2002 as bulls rode positive momentum after upbeat U.S. data overnight helped it overcome tough resistance.

In a reflection of investor sentiment, holdings in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell 0.25 percent to 714.07 tonnes on Monday, the lowest since mid January.

Aside from more U.S. economic data due later in the day, bullion traders were also keeping an eye out for news on the Greek debt crisis, any worsening of which could trigger safe-haven bids.

Athens and its creditors from the euro zone countries and the International Monetary Fund are racing to hammer out a deal that would prevent the country from defaulting and potentially leaving the euro zone.



So, guys yesterday action just confirms what we've said in weekly reseach - sentiment data is bad sign for bulls on gold market. It is interesting to mention that even on poor consumption data - all US gold equities has dropped, while gold at this moment was thrusting up. This is bright confirmation that nothing stand behind the gold right now and no real purchases could support it upside action. All these upside splashes are just speculator's games and stop hunters tricks.

That's why on daily gold market was able just to test new MPP...
On 4-hour chart our expectation of possible testing K-resistance and WPR1 (although it has not been quite reached) has been confirmed. Market has failed to pass through it and this support our bearish view, keeps bearish trend here valid. Thus, our next destination in short-term perspective is 1175 support area. Failure there will push gold to 1130-1140 area:

 

[Sive Morten]

Gold Daily Update Wed 03, June 2015

Good morning,


Reuters reports today Gold eased on Wednesday even as the dollar nursed sharp losses on expectations of a Greek debt deal, with investor sentiment remaining bearish due to outflows from bullion-backed funds.

Traders said gold's overnight jump was underwhelming given the sharp drop in dollar and weak U.S. factory data, which should have typically triggered strong safe-haven bids.

"The move is disappointing considering the very weak dollar environment," said analysts at ScotiaMocatta.

"The gold market continues to move sideways around $1,200 with no indication of which way it should break."

The losses were triggered by the strength in the euro after Greece's creditors on Tuesday drafted the broad lines of an agreement to put to the leftist government in Athens in a bid to conclude four months of acrimonious negotiations and release aid before the cash-strapped country runs out of money.

Failure to reach agreement this month could trigger a Greek default and lead to the imposition of capital controls and a potential exit from the euro zone, dealing a serious blow to Europe's supposedly irreversible single currency.

Bullion had gotten some support in recent sessions from the uncertainties over the Greek debt crisis as investors sought safety in the metal.

However, the uptick in prices is being undermined by continuous outflows from gold exchange-traded funds (ETF), a sign that investors are not confident of any price gains.

Holdings in SPDR Gold Trust, the world's largest gold ETF, fell 4.18 tonnes to 709.89 tonnes on Tuesday, the lowest since January.

Holdings in the top eight gold ETFs were at a five-year low, as of Monday.

Markets also continued to await more U.S. economic data, including the monthly non-farm payrolls report on Friday, to gauge the strength of the economy and how it would affect the Federal Reserve's interest rate policy. Higher rates would reduce demand for non-interest-paying bullion.



Compares to FX market gold has not shown any significant action. No upside action has happened even on dollar weakens. Mostly our analysis stands the same and even has got more confidence from today's ETF stats.
Thus, on daily chart we could get steep AB-CD pattern that has target right at lower border of daily flag consolidation, oversold and MPS1:

On 4-hour chart market mostly stands in the same area but moves below WPP:

That's being said we still stand on idea that chances on downward continuation are significant and may be this is not bad area to think about short entry...

 

[Sive Morten]

Gold Daily Update Thu 04, June 2015

Good morning,


Reuters reports today Gold was near its lowest in three weeks on Thursday as robust economic data made an increase in U.S. interest rates look more likely and signs emerged of progress in the Greek debt crisis.

Data on Wednesday showed the U.S. trade deficit narrowed in April, while companies picked up their hiring in May after a pullback the previous month.

The economy looks to have recovered somewhat from a first-quarter contraction and that bolstered expectations the Federal Reserve could raise interest rates later this year.

"Our outlook for the gold price remains bearish," Societe Generale analyst Robin Bhar said. "As U.S. economic growth is expected to strengthen over the summer, a rate hike should become imminent by September."

Higher rates would dent demand for non-interest-paying gold, while boosting the dollar.

Investors are now waiting for U.S. weekly jobless claims data later in the day and a nonfarm payrolls report on Friday for more clues about the economy.

Safe-haven support for gold from the Greek debt crisis also weakened on signs that Athens could be inching closer to a deal with its creditors.

Greek Prime Minister Alexis Tsipras emerged from late-night talks with senior EU officials in Brussels saying a deal with creditors was "within sight" and that Athens would make a payment due to the IMF on Friday. [ID:nL5N0YQ01C]

Failure to reach agreement this month could trigger a Greek default and lead to the imposition of capital controls and a potential exit from the euro zone, which could push investors to seek safety in bullion.

Charts were also not looking good for gold, with prices expected to revisit their May 1 low of $1,170.20, according to Reuters technical analyst Wang Tao:
Spot gold may revisit its May 1 low of $1,170.20 per ounce, as indicated by a trendline and a head-and-shoulders.

Gold broke the trendline rising from the March 17 low of $1,142.86 again, thanks to the fall on June 3. The break simply wipes out the chance of an extension of the preceding uptrend developing from this low.

More significantly, the break has confirmed the head-and-shoulders which points to an aggressive target at $1,130. A realistic target could be $1,170.20.

Resistance is at $1,190, the 23.6 percent Fibonacci projection level of an upward wave C that rose from $1,170.20, and a break above this barrier could lead to a gain to $1,201, the 38.2 percent level.

Gold wasn't getting much support from the physical markets, either.

A tight price range and expectations of more declines, in a seasonally quiet period for bullion, kept consumers away from gold jewellery, bars and coins.

Premiums in China, the top consumer of bullion in the first quarter, have barely moved in the past few weeks from $1.50-$2 an ounce to the global benchmark. In India, prices have been broadly on a par with global prices.


So investors also keep moderately bearish view on Gold. But today guys, military action has been started again in Ukraine. Simultaneously Russian peacekeeper forces have been blocked in Transdnestr region between Moldova and Ukraine. Transdnestr has no direct border with Russia. This makes us think that geopolitical situation starts to become hotter and this will have significantly more serious consequences than just situation in East Ukraine. It means that unexpected action on gold could happen at any time. We will not dare to stay on thought that this will be some reversal, may be not, may be reaction will be short-term, but it will bring volatility and nervousness and this is not good for trading...
On daily chart, as we've expected gold has ticked slightly lower, but no major action has happened yet:

Bearish dynamic pressure has started to work on 4-hour chart and market almost has reached 1175 major fib support.

Still, major action probably will happen on NFP and Greece tomorrow. Reuters poll shows expectation on NFP at 225 K.

 

[Sive Morten]

Gold Daily Update Fri 05, June 2015

Good morning,


Reuters reports Gold hovered near its lowest level in five weeks on Friday and was on track for a third straight weekly slide, as robust U.S. economic data bolstered expectations of an interest rate hike this year.

Traders were awaiting the key U.S. nonfarm payrolls report due later in the day for more clues on the economy and how it would impact the Federal Reserve's interest rate policy.

"Bullion's near-term price direction may be dictated by the result of the nonfarm release as a lower-than-expected number would be viewed as positive for gold," said HSBC analyst James Steel.

The nonfarm payrolls data is seen as a key barometer of the world's largest economy. Nonfarm payrolls are expected to have expanded to 225,000 in May from 223,000 in April.

Strong data would keep the Fed on track to raise interest rates later this year, a move that could diminish demand for non-interest-paying bullion.

Better-than-expected data this week has already taken a toll on bullion, with cautious investor positioning ahead of the nonfarm payrolls report further dragging on prices.

Bullion failed to get any support from a weaker dollar.

News that Greece delayed a key debt payment to the International Monetary Fund due on Friday also did not trigger any significant safe-haven bids.

The delay came as German Chancellor Angela Merkel said talks on a cash-for-reforms deal were still far from reaching an agreement. Greek Prime Minister Alexis Tsipras demanded changes to tough terms from international creditors for aid to stave off default.

The failure to break above $1,200 has brought in fresh selling, and a break below $1,171 is likely to see a decline to a March low of $1,143, said ScotiaMocatta analysts.

Trading in physical markets was bleak despite the lower prices. A tight price range and expectations of more declines, in a seasonally quiet period for bullion, kept consumers away from gold jewellery, bars and coins.

Premiums in major trading centres across Asia, the top consuming region, have barely moved in the past few weeks.

The Perth Mint's sales of gold and silver products tumbled to three-year lows in May, on a sluggish price outlook for the precious metals, data on the mint's website showed on Friday.



So, guys, technically nothing has changed yet. Gold is bearish and we have still the same target - 1150 first, then to 1130 lows and then lower to 1050-1080 area in long term perspective.
Yesterday, gold has reached our 1175 support and its destiny probably will be defined today. Right now market stands at minor 61.8% AB-CD target:

On 4-hour chart market has completed 1.27 Butterfly right at solid support area - Agreement and WPS1, may be some bounce up will happen before NFP will be released:

But if market will move below 1170 - it probably will reach stops and could show downward acceleration.

 

[Sugit]

TP now?

Hello Sieve,
May i ask, seeing the reaction on Thursday on the support at 1175 (May MPR2) would you suggest to take profit and await NFP, or just stay in the trade?
Thanks!