GOLD PRO WEEKLY, June 06-10, 2016

[Sive Morten]

Fundamentals

(Reuters) Gold surged more than 2percent and was on track for its biggest one-day jump in seven
weeks on Friday after U.S. payrolls data fell well short of forecasts, boosting expectations that the Federal Reserve will stand pat on interest rates. The U.S. economy created the fewest jobs in more than five
years in May, a Labor Department report showed.

That could make it difficult for the Fed to raise interest rates further. The data sparked a rebound in gold, which had slid to a 3-1/2 month low of $1,199.60 on Monday on growing expectations for a hike.

"The climate for gold to go higher ... was certainly set because this pretty sharp drop in bond yields, along with the pull-back in the U.S. dollar and declining equities created a good combination for the gold market to go higher," said James Steel, chief metals analyst for HSBC Securities in New York.

U.S. and European shares, the dollar, oil and bond yields dived after the U.S. job data. "The sharp drop in non-farm payrolls is negative for the dollar and positive for gold," ABN Amro analyst Georgette Boele
said. "Expectations for a rate hike soon have clearly diminished ... Precious metals prices will fly higher."

Gold was on track to rise 2.3 percent this week, following four straight weeks lower after comments from senior U.S. central bank officials, including Fed Chair Janet Yellen, boosted expectations of an imminent rate rise.

Gold is highly sensitive to U.S. rate expectations, as rising rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. Gold demand in Asia, home to the world's biggest consumers of physical gold, was muted this week as a slight increase in India and Japan was offset by reductions in other trading centers as buyers awaited further price declines.

CFTC data shows an action that we've expected - net long position has dropped with open interest. This happens due closing of long positions. Still, overall position is rather significant and decreasing should continue. It's difficult to say right now how this process will go on a background recent poor NFP data, but when market will chill out a bit, it could turn south again. Mostly it will depend on Fed comments next week.
Another shock could happen if Fed still will rise rate despite bad NFP data. That will be double bearish impact.

Technicals
Monthly

So, guys, gold has taken a pause in upward action around 1300 area. We've warned about it 3 weeks ago when we've got specific numbers from CFTC. Based on situation in sentiment and existence of strong resistance area makes problems for gold on a way up.

Current uward action is first one after long term of decreasing and it should be interrupted by deep retracement sometime. Probably it will happen very soon and may be already is happening. Still this potential downward action has a great chance to become just a retracement. Overall political and financial situation in the world probably will not give a chance to relax. Thus, we have a positive long-term view on gold market.

On monthly chart we will get nice bearish engulfing pattern. Usually it leads to comounded retracement down, equals to the length of the bars. Thus, following this logic we could see gold @ 1130-1150 area very soon. But after that it could become a right shoulder of pattern that could be formed here.

Recent upside bounce on Friday, due bad NFP numbers brings nothing important yet to monthly chart and looks just minor retracement back inside enguling body - typical action for any market after engulifng pattern been formed.

Situation on monthly chart stands relatively simple - we could speak on upward trend continuation only if price will take recent top and engulfing pattern will fail.

Weekly
Trend has turned bearish on weekly time frame. Now market is neither OB nor OS. Although we've expected upside bounce out from 1205 level, even to 1245 area, since this is weekly support and Oversold, but we haven't suggested such strong rally, supported NFP numbers.

Currently picture looks a bit uncertain. We do not have any assitance from trend and OB/OS indicators. We do not have any clear patterns. Here we could suggest only one thing - probably we will get upside continuation to MPR1 @ 1279 area. First - because previous top was around it and this will give us H&S shape. Second - because price has moved above MPP and next destination by pivot framework is MPR1.

Widening triangle or say, diamond pattern, suggests even more extreme action - new top should be formed before reversal.

So as you can see we have a lot of different patterns potentially and we can't exclude none of them by far.
But as trend stands bearish, right now we will treat this action as a retracement and work with Fib resistance levels if price will move higher

Daily

As market has started upside action here, trend has turned bullish. While we still see some more upside potential here, it is still could be interrupted by minor retracement. And reason for that could become B&B "Sell" pattern.

Although this pattern will be a bit extreme journey, since we have big jump against it, but still this is B&B "Sell". You will have to decide by yourself whether to trade it or not. But we talk about it, since it could trigger minor bounce down.

As you can see we have 9 bars of bearish thrust, close above 3x3 DMA and price almost has reached 5/8 Fib resistance level around 1250. On Monday gold probably will reach it. If we will get any bearish reversal patterns on hourly chart, say, DRPO, or any other - this could become a signal of starting retracement down.
Its target will stand at 5/8 Fib support of whole Friday rally.

Thus, we do not see anything else right now on daily chart - either B&B "Sell" or, just waiting for the end of this upside action.

Hourly

So here we also do not have much. Upside action was so fast that any Fib extentions here are useless. We could apply only extensions of previous downsiwng. First one already has been hit, second stands at 1255 - precisely around daily Fib resistance where we will be watching for B&B "Sell" pattern.

If market will move slightly higher, then we should get 2 major support areas. First one will be around WPP and K-support ~1230. Second - approx. 1220 is 5/8 Fib support and target of potential B&B pattern.

Conclusion:
Friday's rally has limited impact on monthly chart yet and overall long-term picture still stands bearish.

In short-term perspective it's few that we could do. Recent rally has overruled all patterns that were forming previously and all that we could do by far is to watch for DiNapoli daily pattern. Thus, we will focus on some short-term tactical setups until market will calm down a bit.

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

 

[Sive Morten]

Good morning,

(Reuters) Gold slipped on Tuesday but held near two-week highs as the metal was underpinned by
cautious remarks by Federal Reserve chair Janet Yellen, who gave little indication about the timing of U.S. rate increases.

Yellen on Monday provided a largely upbeat assessment of the U.S. economic outlook and said interest rate hikes are coming but gave little sense of when.

After sliding more than 6 percent in May, bullion has risen about 2.4 percent this month so far on diminishing expectations of an earlier than expected rate hike. Higher rates could dent demand for non-interest-paying gold.

Spot gold dipped 0.3 percent to $1,241.80 per ounce by 0649 GMT. It touched a two-week high of $1,248.40 on Monday. U.S. gold fell 0.2 percent to $1,244.40.

"The cautiousness of investors is probably temporary and we would expect investors to take this opportunity to reload and look at further gains in the coming weeks," said Daniel Hynes, an analyst at ANZ in Sydney. "There are some key data releases this week as well and investors probably don't want to commit aggressively until some of that data is passed. I think they'll be positioning for a general move higher over the next week."

The Fed said on Monday that its index on labour market conditions fell to the lowest since May 2009, reinforcing a perception of slowing job growth following last week's stunningly weak payrolls report.
Almost ruling out the possibility of a rate hike at the Fed's meeting next week, two top U.S. central bankers Dennis Lockhart and James Bullard continued to support the prospects of a rate rise soon after.

"Janet Yellen's cautious jobs comments helped reaffirm the view that the Fed may hold off from raising rates at next week's FOMC meeting," said James Steel, chief metals analyst for HSBC Securities in New York. "In the near term, there may be more room to the upside as market sentiment has shifted from favouring a near-term rate hike to a more even split between those expecting a rate rise this month and those looking for one later in the year."

Asian stocks hit a five-week high on Tuesday, while the dollar wallowed close to four-week lows against a basket of currencies. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.03 percent to 881.15 tonnes on Monday.

Gold market still keeps chance on B&B "Sell" pattern. Today analysis of AUD also points on retracement down. As aussie stands in solid correlation with gold - this gives some confidence with B&B "sell" as well.

All neccesary steps for B&B has been accomplished. Thrust down, cross of 3x3 DMA, reaching major Fib level withing 1-3 close above 3x3 DMA. Minimal target of B&B will be 5/8 Fib support of whole upward action. This is approximately 1223-1225 area:

On hourly chart we see that market slightly has not reached 1250. At the same time we have signs of bullish dynamic pressure here. Although trend has turned bearish - price action is not, and forming triangle.
Most probable action here is appearing of butterfly with clearing out former top and reaching 1250 daily resistance. This butterfly will be our triggering pattern for short entry, or you could wait for more confirmation, say, H&S. Very often in reversal points, butterfly later becomes a part of H&S....

 

[Sive Morten]

Good morning,

(Reuters) Gold touched a fresh two-week high on Wednesday as the possibility of an early U.S. interest
rate hike appeared to dim following dovish comments by Federal Reserve Chair Janet Yellen earlier this week.

Yellen gave a largely upbeat assessment for the U.S. economy on Monday and said interest rate increases were coming, but investors focused on her lack of guidance about when.

Spot gold was up 0.6 percent at $1,250.80 an ounce by 0649 GMT. It hit a high of $1,251.00 earlier in the session, its strongest since May 23.

U.S. gold climbed 0.5 percent to $1,253.20. "The direction for this week will be a little quiet (for gold), waiting for the FOMC meeting next week. But I think nothing is going to change due to disappointing non-farm payroll data," said William Wong, assistant head of dealing at Wing Fung Precious Metals in Hong Kong.

Weak U.S. payrolls data, released last week, has boosted expectations that the Fed will stand pat on interest rates for the time being. Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding bullion.

Gold, which slid more than 6 percent in May, has risen about 2.7 percent so far this month on dampened expectations of an early rate hike. The World Bank slashed its 2016 global growth forecast on Wednesday, which could also throw cold water on a possible Fed move.

"It boils down to how the Fed will take into consideration this global slowdown. If they take this very seriously and show no urgency in a rate hike then it will be a boon for gold," said Helen Lau, an analyst at Argonaut Securities in Hong Kong.

The world's biggest consumer of the yellow metal, China, kept its gold reserves unchanged, at 58.14 million fine troy ounces at the end of May, from the end of April, the central bank said on Tuesday.

Analysts, however, said China still has enormous U.S. dollar holdings and is likely to keep purchasing gold in order to diversify its forex reserves, which should serve as a supportive factor for the metal. Asian shares edged up on Wednesday, while the dollar languished near four-week lows.

So, we continue to watch for possible patterns on gold market. Yesterday we've agreed to watch for B&B "Sell". Today market has reached 1250 resistance and trend line. As we've aknowledged, that this B&B has greater risk, due small thrust and too deep retracement - we will not take position blindly but will be watching for reversal patterns on intraday charts.

On 4-hour chart we have next possible destination point - 1264 area, that includes WPR1, Fib level and natural support/resistance area. If B&B will fail - this wil be next area to watch for. Failure of B&B will not necessary mean impossibility of downward turn, it could happen, just by some another pattern. Right now chances on big AB=CD pattern down are still exist:

On hourly chart our expectations have been completed - bullish dynamic pressure has pushed market higher. Although butterfly has changed the shape a bit.

That's being said. Today we're watching for 1255 area - completion of Butterfly. If market will form, say H&S pattern, based on this butterfly, our B&B could work. If market will move above 1255 further, then we will drop away B&B and start watching for next, 1264 area...

 

[Sive Morten]

Good morning,

(Reuters) Gold hit a fresh three-week high on Thursday, after jumping 1.5 percent overnight, helped by
a weaker dollar and diminishing expectations of an early interest rate hike by the U.S. Federal Reserve.
The safe haven asset has risen by about 1.5 percent this week so far, boosted by disappointing U.S. non-farm payroll data and Fed chair Janet Yellen's cautious comments on Monday.

Spot gold was nearly flat at $1,262 an ounce by 0651 GMT, having hit a high of $1,266.01 earlier in the session, its best since May 18. U.S. gold rose 0.2 percent to $1,264.90.

"While there is likely further room to the upside for gold, there may be some road blocks to the rally near term. We expect that as the FOMC (Federal Open Market Committee) approaches trading volume may quieten down and some near term traders will book square and take profits," HSBC analyst James Steel said in a note.

"We suspect net long positions have increased significantly and this should be partly reflected in the next set of Commitments of Traders data. This may restrain further purchases and may even trigger profit taking."

The yellow metal has risen 19 percent so far this year and the rally has allowed bullion miners like Barrick Gold among others to eye expansion and study new ways to increase production for the first time in five years.

Russia produced 67.75 tonnes of gold in January-April 2016, up from 63.27 tonnes in the same period last year, the finance ministry said in a statement on Wednesday.

"I think gold is going to stay range bound until we see more confirmation. We need more confirmation from labour market data in the U.S. that we get in a month from now. The market wants to see at least two data points," said Dominic Schnider of UBS

Wealth Management in Hong Kong. "There's lot of uncertainty. That uncertainty needs to be priced out. Do we see that happen in the second half? Yes. But for the time being it's a wait and see game," he added.

So, on gold market our B&B wasn't formed, market has moved higher, according to our second scenario. As far as we haven't got reversal patterns on intraday charts yesterday - gold just continues action to 1264.

Right now, guys, to be honest, it is very difficult to suggest further perspectives. Mostly we still keep an idea of 2-leg retracement down, since there are important reasons for that - COT data, technical situation etc. Also we have currencies that stand at resistance (say, NZD) that relatively confirms our expectations.

We need at least to take a look at fresh COT report that will show numbers after NFP data. May be in weekend we will get more clarity. Right now market stands at resistance and minor bounce down probably will happen:

It could be triggered by DRPO "Sell" pattern on hourly chart, with minimal target around 1250:

In general, activity could start decreasing as we 're approaching to Fed meeting and Brexit voting.

 

[Sive Morten]

Good morning:

(Reuters) Gold eased slightly on Friday as the dollar edged up from recent lows, but the metal held near
a three-week high and was on track for a second straight weekly rise.

The safe haven asset has been on an upswing since last Friday and has risen nearly 2 percent this week following weaker-than-expected U.S. payrolls data and comments from Federal Reserve Chair Janet Yellen which dampened expectations of an imminent rate hike.

Spot gold was down 0.2 percent at $1,265.46 an ounce by 0652 GMT. Bullion on Thursday touched its highest since May 18 at $1,271.31. U.S. gold fell 0.3 percent to $1,268.50.

"Last week's unexpectedly weak U.S. jobs data and subsequent cautious tone by Yellen opened the door for gold to resume its bull cycle. A Brexit could see gold push towards $1,400 an ounce," ANZ analyst Daniel Hynes said in a note.

"Investor demand is expected to remain strong in the short term, driven by easing expectations of a rate hike in the United States. However, the backdrop of easing monetary policies, negative bond yields, and a likely pause in dollar appreciation should also be supportive."

The Fed is likely to raise U.S. interest rates in September and possibly as early as July, according to a Reuters poll taken in the days after news of a sharp drop in hiring that has led some to worry that the economy is losing momentum.

Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion
while boosting the dollar, in which it is priced. "UK and German sovereign debt yields fell to record lows,
helping to fuel gold's rally," HSBC analyst James Steel said in a note.

"Safe haven and hedge-related buying ahead of the UK referendum on continued EU membership is becoming more noticeable, with a portion of this demand being funnelled into physical gold purchases."

Holding in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.71 percent to 887.38 tonnes on Thursday, the highest since October 2013.


So, today guys it will be mostly bla-bla-bla update. I'm not sure that we even need charts, since nothing has happened since yesterday. It could happen that market will become more quiet soon, as we're coming to very important events - Fed meeting and Brexit voting.
Currently there are too much imputs that could impact on gold. From technical point of view I would say that market could move lower and still start AB-CD retracement down. Major reasons - overload speculative long positions, first upside action after long-term bear trend, reversal swing on daily chart. Usually in such a circumstances odds suggest 2-leg retracement. Besides, H&S shape is becoming clear on daily chart:

At the same time, we have big uncertainty from fundamental inputs - what will happen on voting? Yes, some demand for safe haven should happen. Some analysts think that gold will jump to 1400 is UK will out. But USD is also safe haven, thus how price will change in USD? Second, Fed... We will not get rate hike in June, that's true, but what if we will get clear hints on July? Gold should drop, right? And what if UK leaves and Fed hints on rate hike in July?
So, as you can see it's too blur situation. That's why we should follow the facts. Right now market stands below former ~1300 top. Fact. Until it stands below it - we can't talk on upside trend continuation and still stay on previous thought about 2-leg downward retracement.
Currently we call you do not take long positions. Gold needs some free net long position to support upside trend and we will take a look at weekend what has happened with it by COT report.
If position is still overloaded - then gold just has no upside potential and rally could become very short-term.
Usually when market stands in such uncertainty, it is better to stay aside. Experience tells as soon as market brings clarity - you have good chance to take a position and action usually strong, because a lot of other traders are waiting for this clarity as well. And they also will enter and support trend.
Since we can't predict results of voting and Fed - we could stay only with technical picture. But currently it doesn't deny chances on AB=CD correction down.... That's lets stay on this idea by far.