Sive Morten
Special Consultant to the FPA
- Messages
- 18,875
Fundamentals
Last week gold have got solid boost from two major factors - Fed policy announcement and import tariffs. We've touched this topic briefly in our EUR weekly research. It is difficult to say definitely what stands beyond tariffs and what aim they are tracked, but no doubts, this is not impulsive decision by D. Trump and it is a mistake to think that he doesn't understand all mutual steps that could be taken major US trade rivals and partners.
Still, U.S. President Donald Trump signed a memorandum that could impose tariffs on up to $60 billion of imports from China, prompting Beijing to urge the United States to "pull back from the brink". As there will be
30-day consultation period, which will keep door open for compromises of any kind, it will keep gold market in tension and support it.
There are a lot been said around U.S. Federal Reserve that it gave guidance on the pace of interest rate rises that was less aggressive than some investors had expected. But we have another part of gold success - political tensions inside US.
Trump's appointment of John Bolton as national security adviser. Bolton has previously advocated using military force against North Korea and Iran.
Adding to the turmoil, there was a period of suspense on Friday after Trump threatened to veto the $1.3 trillion spending bill passed by Congress, raising the specter of a government shutdown. He later signed the bill.
So, as it correctly mentioned in Reuters news:
"There are tensions all over the place. There’s the U.S. tensions, Trump and Congress clearly clashing with a lot of disagreements. The fact that gold has not really attracted much interest during this whole period finally caught up today," said Bill O'Neill, partner at Logic Advisors.
Mentioned reasons are not short-term, thus it will support gold market for some time with different degree.
COT Report
CFTC data doesn't reflect yet recent events on gold market as last report stands due 13th of March. It is vice versa here, situation looks bearish as net long position is decreasing within last 5-6 weeks. In recent week open interest has increased and indicates that new shorts were opened there. I would suggest with high probability that next CFTC report will be different and it will be interesting to see how open interest will change due recent rally
SPDR Fund gives better presentation of real situation on the market - there are real purchases stand beyond recent rally on gold, which makes it reliable:
Monthly
February and March by far stand as inside month for January. To change picture on monthly chart, market should show really significant swings.
Major resistance still stands at 1380-1391 that includes 2016 top, major Fib level and YPR1.
In fact, most important moment for long-term gold right now is ability to move higher. 1327 level is long-term COP target of AB-CD started at 1046$, in July 2015. First it was reached in July 2017. After logical minor bounce price returns back to it. But right now it should be an action higher, to next 1450 target, which is OP of the same AB-CD. If gold will not be able to do it - strong drop is possible, because price will fail to proceed next extension leg, showing inability and lack of strength to do it. This could break whole AB-CD construction.
MACD trend stands bullish here. Taking in consideration tight standing right under resistance - this is good sign for bulls. Downside reaction was rather small, in scale of monthly chart.
Weekly
Within two months market was forming right tight consolidation where weekly bars stand rather close to each other, and a lot of inside weeks were form.
Last week we've confirmed that bullish scenario is still valid as market holds above 3/8 level after AB-CD retracement down has been completed. Also we've mentioned bullish grabber. Logical conclusion that we've made - 1300 lows is major low to watch for. Until gold will stand above it, it will keep chances to proceed upward action. And market was able to hold above it. Strong rally has followed last week.
Now we again could speak on our major OP target at 1377. But if gold will proceed in the same manner, OP will become just tactical destination point as it stands around previous top. Breakout will lead to jump in volatility and massive stop order clapping.
Also gold is forming a kind of flag pattern right under strong monthly resistance - this usually happens before upside breakout attempt.
Daily
Last week we said that gold is like a hunted beast - it has to either turn up immediately or bullish context will be broken. And this suggestion was confirmed. Indeed, gold has shown upside rally, trend has turned bullish.
On daily chart next destination point stands around 1383, while on intraday charts we have closer targets. Right now, as you can see, price has met overbought and MPR1. So, some retracement could happen on coming week, which will be our chance for long position taking.
Intraday
4-hour chart shows next target around 1368 as market already has reached COP and OP:
Preliminary analysis shows that 1335 level is suitable for possible long entry. This is K-area and WPP. Also 1335 is natural support/resistance area:
Conclusion
Gold market right now is driven by external political factors. Information that is available right now suggests that this should be medium-term lasting action, especially this relates to tariffs turmoil. This fact let's us think that gold will be supported within few weeks and could reach higher targets, at least nearest ones around 1370-1385.
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.
Last week gold have got solid boost from two major factors - Fed policy announcement and import tariffs. We've touched this topic briefly in our EUR weekly research. It is difficult to say definitely what stands beyond tariffs and what aim they are tracked, but no doubts, this is not impulsive decision by D. Trump and it is a mistake to think that he doesn't understand all mutual steps that could be taken major US trade rivals and partners.
Still, U.S. President Donald Trump signed a memorandum that could impose tariffs on up to $60 billion of imports from China, prompting Beijing to urge the United States to "pull back from the brink". As there will be
30-day consultation period, which will keep door open for compromises of any kind, it will keep gold market in tension and support it.
There are a lot been said around U.S. Federal Reserve that it gave guidance on the pace of interest rate rises that was less aggressive than some investors had expected. But we have another part of gold success - political tensions inside US.
Trump's appointment of John Bolton as national security adviser. Bolton has previously advocated using military force against North Korea and Iran.
Adding to the turmoil, there was a period of suspense on Friday after Trump threatened to veto the $1.3 trillion spending bill passed by Congress, raising the specter of a government shutdown. He later signed the bill.
So, as it correctly mentioned in Reuters news:
"There are tensions all over the place. There’s the U.S. tensions, Trump and Congress clearly clashing with a lot of disagreements. The fact that gold has not really attracted much interest during this whole period finally caught up today," said Bill O'Neill, partner at Logic Advisors.
Mentioned reasons are not short-term, thus it will support gold market for some time with different degree.
COT Report
CFTC data doesn't reflect yet recent events on gold market as last report stands due 13th of March. It is vice versa here, situation looks bearish as net long position is decreasing within last 5-6 weeks. In recent week open interest has increased and indicates that new shorts were opened there. I would suggest with high probability that next CFTC report will be different and it will be interesting to see how open interest will change due recent rally
SPDR Fund gives better presentation of real situation on the market - there are real purchases stand beyond recent rally on gold, which makes it reliable:
Monthly
February and March by far stand as inside month for January. To change picture on monthly chart, market should show really significant swings.
Major resistance still stands at 1380-1391 that includes 2016 top, major Fib level and YPR1.
In fact, most important moment for long-term gold right now is ability to move higher. 1327 level is long-term COP target of AB-CD started at 1046$, in July 2015. First it was reached in July 2017. After logical minor bounce price returns back to it. But right now it should be an action higher, to next 1450 target, which is OP of the same AB-CD. If gold will not be able to do it - strong drop is possible, because price will fail to proceed next extension leg, showing inability and lack of strength to do it. This could break whole AB-CD construction.
MACD trend stands bullish here. Taking in consideration tight standing right under resistance - this is good sign for bulls. Downside reaction was rather small, in scale of monthly chart.
Weekly
Within two months market was forming right tight consolidation where weekly bars stand rather close to each other, and a lot of inside weeks were form.
Last week we've confirmed that bullish scenario is still valid as market holds above 3/8 level after AB-CD retracement down has been completed. Also we've mentioned bullish grabber. Logical conclusion that we've made - 1300 lows is major low to watch for. Until gold will stand above it, it will keep chances to proceed upward action. And market was able to hold above it. Strong rally has followed last week.
Now we again could speak on our major OP target at 1377. But if gold will proceed in the same manner, OP will become just tactical destination point as it stands around previous top. Breakout will lead to jump in volatility and massive stop order clapping.
Also gold is forming a kind of flag pattern right under strong monthly resistance - this usually happens before upside breakout attempt.
Daily
Last week we said that gold is like a hunted beast - it has to either turn up immediately or bullish context will be broken. And this suggestion was confirmed. Indeed, gold has shown upside rally, trend has turned bullish.
On daily chart next destination point stands around 1383, while on intraday charts we have closer targets. Right now, as you can see, price has met overbought and MPR1. So, some retracement could happen on coming week, which will be our chance for long position taking.
Intraday
4-hour chart shows next target around 1368 as market already has reached COP and OP:
Preliminary analysis shows that 1335 level is suitable for possible long entry. This is K-area and WPP. Also 1335 is natural support/resistance area:
Conclusion
Gold market right now is driven by external political factors. Information that is available right now suggests that this should be medium-term lasting action, especially this relates to tariffs turmoil. This fact let's us think that gold will be supported within few weeks and could reach higher targets, at least nearest ones around 1370-1385.
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.
