GOLD PRO WEEKLY , May 08 - 12, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold pared gains on Friday after data showed U.S. job growth rebounded in April and stayed on track for its biggest weekly loss in six months as expectations for a U.S. interest rate hike in June grew and euro zone political risk receded.

The dollar hit its lowest level in roughly six months against the euro despite the sharp rebound in U.S. payrolls data, which did not shake investors' bullishness toward the euro ahead of the second round of France's presidential election.

Spot gold was up 0.05 percent at $1,227.89 an ounce by 2:35 p.m. EDT (1835 GMT), but set to end the week down 3.2 percent, its biggest weekly drop since November. U.S. June gold futures settled down 0.14 percent at $1,226.90.

"The U.S. employment (data) was stronger than expected," ABN Amro analyst Georgette Boele said. "This only put gold prices slightly under pressure, because the U.S. dollar didn't rally."

Gold fell to the lowest in nearly seven weeks at $1,225.20 on Thursday after the Fed played down any threats to this year's planned rate increases, supporting forecasts of another move in June. The metal is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Concerns over a victory by far-right candidate Marine Le Pen in the French presidential election, which drove gold lower last month, have faded considerably. Sunday's vote is expected to elect centrist Emmanuel Macron, whom investors favour. "Following six weeks of fund buying, gold was left exposed as geo-risks faded, but the fact that ETPs have seen limited selling appetite could be an indication that this was mostly
speculative sellers reducing longs," said Saxo Bank's head of commodities research, Ole Hansen.

COT Report
CFTC data shows absolutely logical dynamic - as Gold has turned to retracement - net speculative long position has dropped a bit as well as open interest. It means that some longs were closed:

Currently we think that it is too early to talk on bearish reversal on gold market. Price action has not overcome yet any red line. Besides, recent SPDR statistics shows that recent drop was not supported by real sell-off:

That's being said, we could make conclusion of moderate bearish sentiment, but the one that typical for retracement stage on the market.

Technicals
Monthly

As gold shows no return back to 1100 lows - it keeps reversal moment of our H&S pattern pretty nice by far. We've talked a lot about large patterns and far perspectives on gold market. Right now we see that some drop has started here and trend is turning bearish, but it brings no problems yet to overall picture.

At this moment overall fundamental background looks supportive for gold market. We see few factors that could support upside action in medium-term period.

First one is Fed policy. Fed will not hurry with rate increase and will not stifle US economy by too early agressive policy. They will support inflationary growth for some time and let economy to become hot a bit. Thus, major impact of Fed policy should come in 2018. This will let gold to ride on inflation for some time in 2017.

Second - multiple elections in EU brings a lot of uncertainty and works as supportive factor for gold market. Now France is choosing the president. Then elections in Germany in 24th of September etc. We've placed some interesting moments in today's Forex Pro Weekly research and I still think that we could stand on the eve of big surprise. Yesterday in debates Le Pen said: “France will be steered by a woman, it will be me or it will be Ms Merkel.”.That was a knockdown for E. Macron. I love her... How French could not like her?

Finally, big uncerntainty of D. Trump policy as domestic as international. Geopolitical tensions also should be backwind for gold market.

These factors could support gold market in medium-term period. Technical picture and sentiment analysis right now also mostly look bullish, but not excludes risk factors totally.

Technically price behavior, short-term sentiment and commodities performance mostly supports idea of bullish reversal pattern here (at least now).
As Fathom consulting suggests - Fed will lead economy to become hot a bit before aggresive rate policy. This should open door for inflation growth, which is supportive factor for gold. Currently gold could stay on its own till June and this could encourage investors to be more brave in taking long positions.

Concerning farer perspective we could make just some suggestions. As we've said technically recent upward action started in Dec 2015 is first one after long term of decreasing and it should be interrupted by deep retracement sometime. Now this retracement stands in place. It is really big chance that gold stands in a stage of big trend changing from bearish into bullish. US economy shows inflation growing. As we've estimated, commodities across the board have turned to growth.

Besides, any Trump protection policy will be accompanied by big spending and expenses, this will lead to grow of inflationary expectations. Thus, we mostly gravitate to idea that gold now stands not in pause of bear trend, but on the eve of new bull trend. Also we expect big structural shifts in EU economy, diminishing Brussels governing role, taking direction on convergence with Russian economy, and through Russia economical infrastructure - with Middle East and Asia.

This is long political talk though, but shortly speaking, we see that the process of building new EU has started. First bell is Brexit. As you know all mature EU countries has started gold repatriation process that should be finished in 2020. So we should be oriented on this year as appearing of the shape of new EU. By gold repatriation process we could gudge on major idea of new EU - each country will out of external governing either Brussel or US and will make it's own policy according with their own national interests. This is how it should be in theory. How this process will develop on practice - we will see.

As you can see we have a lot of driving factors and all of them have significant value. It means that despite direction - either upside (as we think) or downside to 1100 (that is contrary opinion) - action will be very volatile.

But our technical "deep" retracement still could be different. Currently, as market stands at the edge of 1170 Fib support, we could talk on H&S pattern. Besides the shape itself, some features here that in general typical for H&S. For example, relation between head and shoulders - 1.618. Butterfly... very often first part of H&S takes the shape of butterfly pattern...

At this moment we do not have questions and serious doubts on perspective of H&S pattern. Market shows normal behavior for its shape. Also we have nice bullish divergence with MACD that is also typical for reversal patterns. On monthly chart we could specify two relatively close targets. First is YPR1 around 1330, next one is neckline - around 1380 area.

Weekly

So on weekly chart trend stands bullish and market is not at OB/OS. Now price shows pull down from 1278 major resistance area. As you can see, this is major 5/8 Fib resistance and minor 0.618 AB-CD target which creates DiNapoli "Agreement" resistance.

Overall picture still stands bullish in larger perspective. Here we see upside breakout of downside channel and re-testing it later. As retracement already has happened, current upward action should be treated as upside extension stage...

Recent drop looks strong, but we will see what will happen on next week as France elections could bring surprise. Here, price is coming to MACDP line and we also will be watching for bullish grabber on weekly.

This time frame does not bring any trading setups by far, that's why we probably again will have to focus on daily and intraday charts. Retracement depth is our major headache right now.

Daily

Trend is bearish here. Despite NFP release Friday action was inside session and price still stands in area of daily K-support. Here we mostly suggest deeper downside action, by following reasons: breakout of MPS1, forming of bearish reversal swing on 4-hour chart, breaking through previous consolidation around 1265.

As we expect some upward reaction on K-support area, we mostly gravitate to idea of appearing big AB=CD pattern here, with possible target even around 1190 Fib support.

That's why next week we mostly will watch for this upside reaction...

Intraday

On Friday we were a bit frustrated by absence of bullish reversal patterns on intraday chart. But right now this pattern has all chances to appear and it could be DRPO "Buy". At least major part of this pattern is already in place.

Uspide bounce also should be deep, at least to 1250 K-resistance area. Usually when any market forms reversal swing, it show 2-leg AB-CD retracement. And gold market in general shows deep retracements. Thus, this is our primary object for Monday Session...

Conclusion:

Thus, although gold shows deep retracement, but we do not see any real hazard for long-term bullish trend yet. So, it is too early to panic and scream that "everything is lost". Market could form even 1190 retracement, but this will not hurt long-term bullish tendency yet.

On Monday we will watch - wether upside reaction on daily K-area will start or not. In particular we're interested in DRPO "Buy" pattern on 4-hour chart.

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 prices inched up on Tuesday, but remained near seven-week lows hit in the previous
session as safe-haven demand ebbed in the wake of France's presidential election.

Spot gold was up 0.2 percent at $1,228.20 per ounce at 0320 GMT, after touching a seven-week low of $1,224.86 the day before, just above its 100-day moving average. U.S. gold futures advanced 0.1 percent to $1,228.20 an ounce.

"Overall sentiment has been turning from risk aversion to normalized risk tolerance levels, so we can see that demand for gold has been decreasing," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.

Sunday's vote in France saw the market favourite, centrist Emmanuel Macron, elected president. Investor sentiment in the euro zone hit its highest level in almost a decade in May, improving more than expected, thanks to a strong assessment of the current economic situation and expectations that political uncertainty will diminish.

Elsewhere, Wall Street's volatility index , which measures implied volatility of stock options and is often seen
as an investor fear gauge, closed at 9.77 on Monday, its lowest since December 1993. "The fall of the volatility index further hollows out the safe-haven bid that has underpinned gold for most of 2017.

Should volatility remain becalmed, gold may find itself on the losing end of a deeper correction to the downside," said Jeffrey Halley, senior market analyst at OANDA.

The U.S. economy's weak performance at the start of the year should slow Federal Reserve plans for further rate increases, St. Louis Federal Reserve bank president James Bullard said on Monday.

"Even though there may be some slowdown in economic recovery for a very short time, Fed officials still think that this does not impact the rate hike decision," To said. "Market participants have made their bets and bond yields are moving up and the gold price moving down." Gold, which is priced in dollars, could see demand take a hit from higher rates as it pays no interest.

Holdings of SPDR Gold Trust fell 0.14 percent to 851.89 tonnes on Monday. Holdings have fallen over 8 tonnes in the past two weeks.

On gold market reaction on Macron's victory was shy. In recent sessions market mostly forms doji, indecision candles around major daily K-support area. As we've discussed in weekly research, our major concern here is whether market will drop immediately, or will show some respect to K-support first:

Currently gold mostly stands at the edge. Thus, on 4-hour chart our DRPO "Buy" has been confirmed, but no upside action has started yet. Price is coiling around minor 5/8 Fib support. IF it will break it down, this could lead to appearing of DRPO "Failure", which is bearish directional signal. In this case gold should continue dropping to our next target - 1185-1200 area:

On hourly chart we have the same story but in different patterns. Here we have reverse H&S pattern, and market stands at the bottom of the shoulder. Failure here will lead to collapse of H&S and also downside continuation. Thus, in a few hours we will be watching, what will happen:

 

[Sive Morten]

Good morning,

(Reuters) - Gold edged up on Wednesday from an eight-week low hit the session before, with the dollar
slipping after U.S. President Donald Trump abruptly dismissed FBI Director James Comey.

Spot gold was up 0.1 percent at $1,222.21 per ounce at 0312 GMT. On Tuesday, it dropped below its 100-day moving average to its lowest since March 15 at $1,213.81.

"We think that gold's slide could perhaps extend to $1,180 to $1,200, an area of good technical support," said INTL FCStone analyst Edward Meir. "At that point, we should see some decent buying set in, as a roughly 10-percent correction from the highs should make holding the precious metal a more attractive risk-reward
proposition."

U.S. gold futures climbed 0.5 percent to $1,222.50 an ounce. The dollar slid on Wednesday and the perceived safe-haven yen gained after Trump fired Comey in a move that shocked Washington. Rekindled fears that North Korea could be gearing up for another weapons test also supported gold. In an interview with Sky News on Tuesday, Pyongyang's ambassador to the United Kingdom, Choe Il, said North Korea is ready to conduct a sixth nuclear test. Observers of that country have said such a test was likely, but his comments reminded markets that tensions could escalate on the recently calm Korean peninsula.

However, expectations of U.S. monetary policy tightening next month dragged on bullion prices. Prices have fallen about $75 per ounce since hitting a five-month high of $1,295.42 in mid-April. "Gold has lost its appeal as a safe-haven ... markets are refocusing on the growth momentum in the U.S. and prospects of future rate hikes. With French elections over now, there are not many geopolitical risks," Argonaut Securities analyst Helen Lau said.

Interest rate increases could dent demand for non-interest bearing gold, while gold is also used as an alternative investment during times of political and financial uncertainty. Interest rate futures implied traders saw close to a 90-percent chance the Federal Reserve would raise interest rates at its June 13-14 policy meeting, according to CME Group's FedWatch tool.

On Gold market, price is creeping lower - slowly but stubbornly. Probably, right now we could talk on the fact of K-support breakout. Our next target here is 1288 Fib support.
At the same time small upside bounce is possible. Usually markets has feature to re-test broken disrespected K-levels.

On 4-hour chart DRPO has turned to DRPO "Failure" and downward action has continued. Here, guys, we have only single target beacon - this is AB-CD @ 1213.50. and it has not been met yet:

On hourly chart overall price shape takes more clear pattern. Right now it is clear falling wedge and 3-Drive "Buy" inside of it. It means that by completing of 3-Drive - 4-hour target also will be completed. Second - as 3-Drive is bullish reversal pattern, it particularly could trigger upside bounce to 1230 area - to re-test disrespected K-support. This is our trading plan for tod-tom sessions - drop to 1211 and then possible retracement to 1230:

 

[Sive Morten]

Good morning,

(Reuters) - Gold edged up on Thursday to hold just above an eight-week low hit earlier this week, with
the U.S. dollar declining against the yen. Spot gold was up 0.2 percent at $1,220.56 per ounce by 0316 GMT. It hit an eight-week low of $1,213.81 on Tuesday. U.S. gold futures also gained 0.2 percent, to $1,220.70 an ounce.

"Combined with a moderation in confrontational foreign policy rhetoric from the Trump administration in May, a 'market friendly' election result in France is helping to unwind demand for gold to hedge against political risk," BMI Research said in a note.

"Receding risk aversion in Europe and hawkish language from the U.S. Federal Reserve will cap gold demand in the near term," BMI added, cutting its 2017 average gold price forecast to $1,250 per ounce from $1,300. The Fed should hike interest rates three more times this year, Boston Fed President Eric Rosengren said on Wednesday.

Markets are pricing in around a 90-percent chance that the economy is strong enough for the Federal Reserve to raise interest rates at its meeting next month. Gold is highly sensitive to rising rates, which lift the
opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
The dollar edged lower after notching an eight week high against the yen in Asian trade.

Spot gold is expected to test support at $1,209 per ounce, a break below which could cause a further loss to the next support at $1,188, according to Reuters technical analyst Wang Tao.


"From a pure technical-fundamental aspect, everybody would be eying $1,200 as the next level of support, but I think $1,215 support here is not out of the question," said Spencer Campbell, general manager with Kaloti Precious Metals in Singapore.

Holdings of SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, have fallen over 8 tonnes in the past two weeks.

"We have seen some ETF liquidation as people are feeling a little bit comfortable politically," Campbell said.
"Military exercises are being expanded across Asia, in particular the Korean Peninsula. The lack of news in that particular area has taken the edge off the prices of gold, so the pull back has been inevitable."

So, on gold market we do not have a lot of changes. Thus, we mostly need just intraday charts. On 4-hour time frame we still expect another leg down to 1211 area as AB-CD target has not been completed. After that it is possible some upside retracement to 1230 area. This is common feature for markets, when they disrespect strong K-area - they have a feature to re-test it after breakout:

On hourly chart price has changed the shape a bit, but as major 3-Drive pattern as its target are stand the same. Thus, the shape we've treated as whole butterfly yesterday - today has shifted just to left wing of greater pattern:

Still, as you can see this makes no impact on setup and it mostly stands the same - 1211 first and 1230 second.

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices rose on Friday for a second straight session as political uncertainty in the United States following the sacking of FBI chief James Comey pressured the dollar and equities fell.

Spot gold rose 0.2 percent to $1,226.71 per ounce at 0313 GMT. Spot gold rose 0.5 percent in the previous session, its best one-day gain in a month. It had earlier hit an eight-week low of $1,213.81 an ounce on Tuesday. U.S. gold futures were also up 0.2 percent at $1,226.60 an ounce.

President Donald Trump on Thursday ran into resistance for calling ousted Federal Bureau of Investigation chief Comey a "showboat." The attack was swiftly rebuffed by top U.S. senators and acting FBI Director Andrew McCabe, who pledged that an investigation into possible Trump campaign ties to Russia would
proceed.

"Whatever Trump says is important and is affecting the markets and may influence gold prices for the short-term," OCBC analyst Barnabas Gan said. "But, from the second half of the year it should depend on the dollar strength and interest rate environment... We are expecting another two hikes in 2017, which should be bearish for gold."

New applications for U.S. jobless benefits unexpectedly fell last week, while producer prices rebounded strongly in April, pointing to a tightening labour market and rising inflation that could spur the Federal Reserve to raise interest rates in June.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced. The dollar index , which measures the greenback
against a basket of currencies, was down 0.1 percent at 99.570. "While we are somewhat encouraged by the steadiness we are seeing in gold of late, we would still like to observe the action from the sidelines for a little while longer in order to make sure that this is not another bull trap," INTL FCStone analyst Edward Meir said.

"We get a host of Chinese macro releases out over the weekend, providing the commodity group with more direction heading into next week as well."

Spot gold may drop to $1,209 per ounce, as its downtrend from the April 17 high of $1,295.42 remains steady, Reuters technical analyst Wang Tao said.

Asian stocks followed an overnight drop on Wall Street, with MSCI's broadest index of Asia-Pacific shares outside Japan falling 0.3 percent.

It seems that investors has lost interest to gold market by far as major risks stepped down for awhile. We do not see massive sell-off, but we do not see acitivity as well.
Thus, here the only one new thing that we could comment - possible DiNapoli patterns on daily chart. Although at first glance recent drop to 1214 area looks small, but in reality it has sufficient number of candles and has acceptable shape to be treated as DiNapoli thrust down. It means that here we could watch for DRPO pattern or, B&B "Sell" that is more logical in current context:

On hourly chart price has started upward action a bit earlier and cancelled our second butterfly pattern. Right now gold has reached 1228 AB=CD target and Agreement. As CD leg is rather slow and overall price action looks choppy, definitely this is not bullish upside reversal. Such combination usually leads to downward action. Theoretically gold could reach 1235 as well, this level also will be Agreement, but taking in consideration weakness of CD leg, it is rather riskly and not attractive to go long here.

Thus, as all daily bearish signs that we've discsussed in weekly research still stand in place, we think that it would be better to wait for something more valuable on daily chart.