GOLD PRO WEEKLY, March 14-18, 2016

[Sive Morten]

Fundamentals
(Reuters) - Gold fell 1 percent on Friday, as the dollar rebounded and oil and world stock markets rose, after bullion extended the prior session's gains to a 13-month high touched in early trade after the European Central Bank's announcement of additional easing.

ECB President Mario Draghi rolled out measures on Thursday including increased asset buying and a deeper cut to deposit rates, but signaled there would be no further rate cuts.

Spot gold rose as far as $1,282.51 an ounce, its strongest since Feb. 3, 2015, before falling 1 percent to $1,259.01 by 2:27 p.m. EST (1927 GMT), as the dollar rebounded from a three-week low versus the euro.

It was on track to close the week flat after last week's 3 percent surge.

U.S. gold for April delivery settled down 1.1 percent at $1,259.40 an ounce, after peaking at $1,287.80.

"If you were long for significantly negative rates in Europe and Japan, you've seen what you're going to see, especially from Europe," said Rob Haworth, senior investment strategist for U.S. Bank Wealth Management in Seattle.

"If you were long gold because the Fed wasn't going to raise rates, those odds are increasing so it would be a good time to take profit."

The next main market focus is the U.S. Federal Reserve's policy meeting on March 15-16. The Fed lifted rates for the first time in nearly a decade in December.

If the Fed leaves rates unchanged next week, gold could suffer from the resurgence of some short-term risk appetite, ETF Securities analyst Martin Arnold said.

"In the longer term, gold will probably stay above $1,200, around the $1,250 area, while $1,300 represents a strong resistance level," Arnold added.

Supporting bullion, holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, rose to 25.68 million ounces on Thursday, the highest since August 2014.

The relatively weak dollar and a repricing of expectations for U.S. interest rate rises have helped gold rebound by more than 18 percent this year so far. Bullion regained its role as a shelter for risk-averse investors, in the face of tumbling equities and fears of a global economic slowdown.

Physical gold demand slowed in top consumer China this week, while a strike by jewelers protesting against the imposition of a tax curbed demand in No. 2 market India.

CFTC data shows clear bullish tendency - as open interest as net long position increase.

Technicals
Monthly
So since New Year gold stands in upside action. Reasons could be different - geopolitics, investors' assets distribution in the beginning of the year. Upside action currently has not changed situation drastically yet on but we will monitor how situation will change.

We still think that currently gold should be mostly driven by geopolitics, rather than economics. This driving factor creates absolutely new scale of uncertainty and leads to very fast changes on Globe political situation. That's why we suspect that gold market hardly will fall dramatically, since we're just in the beginning of Middle East tensions. The fact that gold was dropping recently on a background of Middle East turmoil looks a bit artificial and this situation already is changing. Thus, recently gold has risen even on strong NFP data, compares to other assets. Recent reaction on GDP revision also was as strong as it could be or as it was some time ago. Demand on safe haven assets starts to increase - just take a look at JPY, CHF and gold, SDPR and other gold funds stats.

Not just Middle East stands in our focus. We see that fumes of this conflict spread over planet. Recall Paris terrorist attack, refugees tensions in EU, Brexit voting, a lot of contradiction inside EU as political as economical - North Stream-2, mutual sanctions, Ukraine membership voting in Netherlands, Montenegro NATO membership and a lot of others. China's financial turmoils is isolated theme for discussion. All these stuff is happening on a background of reducing population wealth and solvency. So, we see that entropy is growing. Currently we could just gamble what game stands under curtain of political meetings among major leaders.

As market gradually starts to come to the same conclusion as gradually situation on gold market starts to change in positive area. International banks purchase gold in big volumes, mostly PBoC and Russian Central Bank. Besides, as now we see clear signs of currency war - gold will get support here either.

Speaking on breakeven points between bullish and bearish sentiment - market should show significant upside action and form bullish reversal swing to destroy current bearish domination. It means that gold has to exceed 1380 area.

At the same time gold needs to move above 1308 to break current bearish trend by forming upside reversal swing.

So, on long-term charts it could happen, that we will not get yet clear tendency and gold could turn to some wide range action. Because right now it is too many sources that could initiate impact on gold market. They will push market in one and other sides. Geopolitical situation in the World has reached very high degree of uncertainty and we believe that sooner rather than later it will become a dominating factor for gold market and already it's becoming.

Anyway, gold's shift from downward action to flat one, even it will be wide - already will be significant moment.
Monthly chart trend has turned bullish.

As you can see upside action has started right after butterfly "Buy" has been completed. Currently market has reached 5/8 resistance of butterfly 's swing. Gold has exceeded Yearly Pivot and this tells on existing bullish trend on monthly chart. As gold is not at overbought here - next logical destination is 1314 area of Yearly PR1.

In general, guys, coming area of 1300-1320 will become a real test of bullish strength. Monthly overbought, YPP and Fib level... hardly market will pass it easily and without solid reactions. Could we get here wide reverse H&S pattern? What d'you think?

Weekly
So within past week we have appealed to weekly levels many times, finally major resistance has been hit. We not occasionally have said that the ceil for last week is 1285 area - Fib level and overbought on weekly chart. Thus, even on recent rally market was not able to exceed it.

Our suggestion on 5$ rally has been completed - market indeed has shown minor upside jump, completed daily target. Still, 2nd week in a row we tell on possible retracement and now all conditions for it have been met. Gold has formed something like bearish Stretch pattern on weekly chart. Reversal was prepared by forming butterfly "Sell" on daily time frame.

We suggest minimum weekly destination point is 1180-1200 area. As you can see it includes trend line support, Yearly Pivot and major 3/8 support level. MPP also stands close. This level is also interesting from perspective of large weekly reverse H&S pattern. 1180 is precise bottom of possible right shoulder.

Although at first glance it seems that 1180 area is too deep, in fact this is just 30% retracement.

Daily

Here guys, we will watch for move down on gold market. Final decision whether to trade it or not stands up to you. Potential trade on short side is treated as sub-trade by us, since it doesn't correspond to our major scenario - trying to get good entry point for long position.

Yes, we have here multiple patterns that suggest downward action. First of all we have butterfly. Also we have multiple bearish grabbers. Friday action was not pure reversal bar, but still price has moved above the top and close below open price of Thu candle. As a result we've got bearish engulfing pattern.
Finally we have bearish divergence here (not shown on this chart). Thus, bearish context exists per se, but trade it could be really nervousness journey, especially with Fed meeting on the back.

That's why our thought is it would be better to become just watchers on a way down and put all energy and diligence to entry on long side later.

Now couple of words on DRPO "Sell" pattern. Currently signs of DRPO are weak. We have thrust up, 2 closes below 3x3 DMA, but the distance between the tops are too long. That's why we can't clarify this setup as pure DRPO "Sell" and do not recommend to rely on it in trading. May be we could treat it as DRPO LAL pattern as maximum.

Hourly
As we expect bearish retracement within 1-2 weeks, hourly chart is mostly dedicated to this sub. Right now the only pattern that we could recognize here is a kind of Double Top. Appearing of W&R at second top increases our confidence with it.

It is interesting that classical target of this pattern points on the same 1190 area that we've discussed on weekly chart. If you still will decide to go short here - look for retracement on a slope of second top. Thus, now 1257-1261 area looks interesting as combination of WPP and Fib level.

Conclusion:
We think that fundamentally gold stands somewhere near bottom and situation is starting to change. But this bottom could be "extended" in time.

In short-term perspective gold has reached important barrier and completed important targets. Logically it could turn to meaningful retracement on daily-weekly charts.

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.

 

[ochills]

Gold forecast, is it visible??? http://money.cnn.com/2016/01/13/investing/gold-prices-jeff-gundlanch/

 

[Sive Morten]

Good morning,

(Reuters) - Gold dropped for a third consecutive session on Tuesday to its lowest in almost two weeks, with investors focused on the upcoming U.S. Federal Reserve policy meeting.

A rise in global equity markets over the past few days has provided headwinds to the gold market, which has gained around 16 percent this year.

The yen advanced against the dollar and Asian stocks languished near the day's lows on Tuesday, after the Bank of Japan held policy steady as expected and offered a bleaker view of the country's economy in the face of lingering anxiety over slowing global growth.

"We are waiting for the outcome of the Fed meeting and data coming from the United States is showing that the state of the economy is not bad," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers Ltd.

"I think there are too many long positions in the market. They are taking some profit."

The Fed's two-day policy meeting will start on Tuesday and be watched for clues on the future pace of U.S. rate increases.

Further U.S. rate hikes could lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced. The metal has risen 16 percent this year as expectations for further near-term hikes faded.

The Bank of Japan kept monetary policy steady but offered a bleaker view on the economy and warned of waning inflation expectations, signalling that global headwinds that may justify deploying yet more stimulus ahead.

The weak move in gold over the last two sessions followed Friday's brief bounce to a 13-month high after the European Central Bank signalled an end to rate cuts and the euro rose sharply versus the dollar. Gold is highly sensitive to monetary policy and resulting currency moves.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 1.08 percent to 790.14 tonnes on Monday from 798.77 tonnes on Friday. In terms of ounces, holdings fell to 25,403,927 ounces from 25,681,155.

Hedge funds and money managers increased their bullish COMEX gold position to the highest in 13 months in the week to March 8, the eighth increase in the last nine weeks, data showed on Friday.

Thus, nothing curious is going on right now. Gold stand in absolutely normal and anticipated retracement as short-term targets and initial upside swing have been completed.
Gold has reached our first predefined support around 1230-1240 area, which is also daily oversold and hardly will drop further right now. It needs some push and may be it will come as surprise from Fed or geopolitical situation.

4-hour

Market has dropped below first K-support area and trend line. Also we have some intermediate supports on a way down and market right now stands at oversold - we keep in mind possible H&S pattern, that's why, actually the next major level is 1190. But gold needs some time to reach it since now it stands at oversold

On hourly chart we still stand with Double Top and market gradually moves to its 1190 destination:

Actually guys, from medium-term perspective - deep retracement here is normal. Since, in fact, this is first upside swing after long-long drop and even dive to 1150 area will be OK.

 

[dkami]

Thanks for you analysis Sive!

Text book A,B,C retracement on H4, SL above my entry, 1st targeting 1238.50 2nd TP around 1247.50

 

[Sive Morten]

Good morning,

(Reuters) - Gold was largely unchanged on Wednesday, after dropping for the past three sessions to its lowest in nearly two weeks, as investors waited for the outcome of the Federal Reserve policy meeting.

The Federal Open Market Committee (FOMC) began its two-day meeting on Tuesday and it is likely to issue a statement at 1800 GMT.

"Gold's reign as the top performing asset since the start of the year is largely supported by safe haven demand, and buying-interest into gold once again should not be discounted, especially if global growth sentiment turns south into the year," said OCBC Bank analyst Barnabas Gan in Singapore.

"Still, this is not our base case scenario, given our bearish outlook on gold prices. This outlook is very much underpinned by further rate hikes by the FOMC."

Worries about global growth and financial instability had led investors to reprice prospects for increases in U.S. rates, sending safe-haven gold to a 13-month high last week. But solid U.S. data readings more recently have rekindled market expectations of further tightening this year.

Fed policymakers are expected to leave short-term interest rates unchanged but also to signal that a rate hike is not too far off as long as the job market and inflation continue to improve.

Further U.S. rate rises could lift the opportunity cost of holding non-yielding bullion.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.26 percent to 792.23 tonnes on Tuesday from 790.14 tonnes on Monday.

In other news in the precious metals market, Russia plans to hold an auction for the Sukhoi Log gold deposit before the end of this year, Interfax news agency cited Russian Deputy Prime Minister Alexander Khloponin as saying on Tuesday.

The Sukhoi Log deposit, in the Irkutsk region of Siberia, has remained one of the world's largest untapped gold deposits for half a century and Russia has been considering selling rights to the deposit for 20 years.

On gold market nothing has happened yet. Gold right now mostly is driven by different factors, thus, Fed solution hardly will impact significantly on it. All that we could expect is jump in volatility, but later downward action probably will continue. At least right now technical picture does not suggest big changes:

From one point of view today downside potential is limited by daily oversold and 1220 Fib support. From the other side - Fed should say something really outstanding to trigger uspide rally on gold, but current market consensus doesn't expect anything of this kind:

On hourly chart market is coiling below neckline of our Double Top pattern and is held by daily oversold probably.

Overall picture on hourly chart looks bearish, since this pennant could indicate bearish dynamic pressure that suggest some drop down in short-term perspective.

 

[Sive Morten]

Good morning,

(Reuters) - Gold ticked lower on Thursday as the market took a breather after rallying 2.5 percent in the previous session following the Federal Reserve's decision to cut the number of planned interest rate hikes, adding to pressure on the dollar.

Gains in Asian stock markets and U.S. crude oil futures took their toll on the precious metal's safe-haven appeal.

"The market jumped after the Fed meeting but there are a lot of people on the long side, so some sort of profit-taking is happening today," said Ronald Leung, chief dealer, Lee Cheong Gold Dealers, Hong Kong.

"We will see how the market reacts in the overnight session. The upside seems to be capped at $1,280 and downside limited at $1,225."

Asian shares gained across the board as risk appetite revived after the Federal Reserve reduced the number of interest rate hikes expected this year, while the dollar nursed substantial losses.

The U.S. central bank held interest rates steady after its two-day meeting, as expected.

However, fresh projections from policymakers showed they expected two quarter-point rate hikes by year's end.

Gold is highly sensitive to the prospect of rising rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Volatility in equities and oil prices, a raft of mixed economic data, and concerns over global growth had curbed expectations for further hikes, allowing gold to rise more than 18 percent this year.

Meanwhile, oil futures extended strong gains on Thursday, continuing to gather support after the world's biggest suppliers firmed up plans to meet to discuss an output freeze.

So, here guys you see why we mostly call to buy deeps but not sell rallies right now on gold. Gold has strong bullish sentiment and taking shorts here brings a lot of uncertainty, surprises and nervousness, even when you have some patterns in place.
Yesterday, as you can see market has reacted on dovish Fed statement. Techically we can explain it as gold stands ad daily oversold. Still, as market has reached medium term resistance and completed some targets - we still think that deeper retrcement is still possible here. Currently, on daily chart it is unclear what shape retracement will take. It could be H&S as we've thought initially, but also, market could move to 1310 and form 3-Drive Sell pattern.
But one thing we definitely know - gold at weekly resistance. MACD shows divergence. Thus, retracement still seems possible:

Here is what we could get o perspective - just one of possible scenarios. But... JPY analysis also suggests new bottom, that's why 3-Drive here is also possible. Besides, our Double Top has failed on hourly chart and this also increases chances on new high:

 

[Sive Morten]

Good morning,

(Reuters) - Gold edged up on Friday with the market on track to end the week on a firmer note as the dollar hovered near its lowest in five months, pressured by the Federal Reserve's plan to make fewer-than-expected interest rate hikes.

"This is reminiscent of market reacting to FOMC statement," said Daniel Ang, analyst at Phillip Futures in Singapore. "Gold is finding support at $1,260, it is reluctant to go below that level and it is mainly due to weaker U.S. dollar."

The dollar held near a 17-month low struck overnight against the yen on Friday as the Federal Reserve's less hawkish outlook for U.S. interest rates weighed on the U.S. currency. The dollar index <.DXY> was set to end the week 1.5 percent lower.

The U.S. central bank held interest rates steady and indicated it would tighten policy this year, but fresh projections showed policymakers expect two quarter-point increases by year-end, half the number forecast in December.

Expectations the Fed would raise rates steadily this year had faded since the bank's initial hike in December, as concerns over global growth roiled financial markets.

Rising rates tend to pressure gold by lifting the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 1.50 percent to 807.09 tonnes on Thursday from 795.20 tonnes on Wednesday.

As yesterday gold has shown just minor action, we will take a look on intraday charts today. As you remember yesterday we've discussed perspectives of 3-Drive Sell pattern.
Thus, last part of this pattern could take a shape of butterfly and it needs to start forming right shoulder:

For that purpose, in turn, market should show minor downward retracement and picture on hourly chart matches to this expectations.
Here we have minor H&S pattern and grabber that increases chances on its triggering. Despite what target will be achieved on H&S - either 1250 or 1240, it will be acceptable for 4-hour butterfly pattern: