GOLD PRO WEEKLY , May 15 - 19, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold rose on Friday and was set to end the week little changed as the sudden sacking of the head of the FBI in the United States stoked investor concerns and boosted demand for bullion, and the U.S. dollar and Treasury yields fell.

Spot gold was up 0.3 percent at $1,228.01 an ounce by 2:52 p.m. EDT (1852 GMT), hovering around the 100-day moving average. Gold rose 0.5 percent in the previous session, its biggest one-day gain in a month.
U.S. gold futures settled up 0.3 percent at $1,227.70.

"You continue to see the political uncertainty continue to support gold," said ETF Securities analyst Martin Arnold, citing the dismissal of the Federal Bureau of Investigation's (FBI) James Comey and the upcoming British election as sources of uncertainty. U.S 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.

But capping gains in gold are expectations that the U.S. Federal Reserve will increase 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. Traders are expecting a 100 percent probability of an
interest rate increase in June, CME Group's FedWatch showed. "After the recent drop, we perceive gold as looking technically stretched, negative momentum indicators are beginning to fade and a June Fed rate hike seems largely expected," said Giovanni Staunovo, analyst for UBS Chief Investment Office.

World stock markets paused near record highs after underwhelming U.S. retail sales data and worries over China's banking system spurred investors to lock in recent profits and pushed U.S. Treasury yields and the dollar lower.

"Gold has found technical support from a rising trend line," said Fawad Razaqzada, technical analyst for Forex.com. "But with the long-term bearish trend line still in place and the metal recently moving back below the technically important 50- and 200-day moving averages, the path of least resistance remains to the downside despite the bounce."

COT Report

Currently CFTC data shows classical retracement picture. Speculative net-long position is decreasing, while open interest decreasing as well. So, it means that traders have closed longs partially. At the same time, they do not hurry to go short. Thus, based on sentiment analysis, we could make a conclusion on retracement but not on bearish reversal by far:

SPDR fund data mostly support this idea. Take a look that while gold has dropped significantly, we do not see massive sell-off in largest gold fund. Long-term investors hold their positions. Yes, we see 7 tonnes outflow within a month, but this is not fast drop:

US Gold shares has shown reaction on gold drop, but it was moderate. Some shares even shows positive dynamic, such as Kinross Gold (KGC), Agnico Eagle Mines (AEM). This makes us think that it is a bit early to talk on bearish reversal.

Technicals
Monthly

As gold shows no return back to 1100 lows yet - 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. Recent statistics on Retail Sales and CPI just confirms our suggestion. Data often releases mixed.

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. In June France will take Parlament elections. This also will be a tough game.

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

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.

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. But usually trend shifting moments are rather painful for any market and bring high volatility when upside and downside swings change each other and rather deep.

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.

We will change our opinion if market will drop below 1170 area. In this case gold will meet the hazard to get butterfly pattern with 1000 and lower targets:

Today, guys we also show you something new... It seems that we still have to accept possible deeper action on gold market. If you will take a look at GOLD/EUR chart, you'll see that we've got bearish grabber here. Overall picture is a bit contradictive. Yes, we've got the grabber but we have uncompleted AB=CD and potential butterfly that could let complete it. Grabber will cancel the butterfly, if it will reach its target... Anyway we will continue to keep an eye on this picture, since it could provide us important sign in the future. USD gold market doesn't show such bright patterns as EUR gold.

Weekly

So on weekly chart we do not have significant changes since last week. In fact, recent week has rather tight range. Trend has turned bearish here, as on monthly chart. 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...

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. Until 1170 lows overall setup will be the same.

Daily

Here price finally re-test our 1230 area that we've discussed last week. Action up was very slow. Right now, guys, we also do not have very big choice. Actually I see only one potential pattern here and it is based on recent thurst down. Yes, this could be some DiNapoli pattern.

To get B&B "Sell" price somehow should reach 1245 resistance within 2 sessions but currently we do not know driving factors that could push gold so high and so fast.

DRPO "Buy" pattern is not limited by time to be formed. So, it has more chances to appear. Although fundamental background is arguable for DRPO, but at the same time we see a bit smooth reaction in COT report on gold price drop.

Anyway, we do not have anything else, thus - will keep an eye on possible directional patterns here.

4-hour

Here we do not see anything special right now. Trend is bullish here and next target stands around 1235 area. This will be Agreement resistance and it is very close to WPR1. So, if DRPO is forming right now - price could turn down out from there.

Next resistance stands around 1245-1250 K-level.

That's being said, on coming week price could continue lazy fluctuation in the same range. On Monday 1235 level will be in focus.

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. Besides, investors shows weak reaction on gold drop and mostly keep long positions in gold.

Short-term gold action is rather choppy and slow. On Monday we expect it should reach 1235 area. In general next week we will monitor whether any DiNapoli directional patterns will appear on daily gold or not.

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.

 

[RahmanSL]

Last week, I have been trading the EUR/USD....but then switched to GBP/USD just before the BOE rate decision....and then before last Friday's market closing, switched back to EUR/USD.
Sive, your analysis is exactly what I was looking for to continue trading EUR/USD next week and, as usual, you are impeccable and most useful & helpful in your analysis.
Thank you very much for your foresight and devotion in giving us further insights into trading the forex market.

My apologies for not not being at this site for a long time but I hope to be able to come here more often.

All the best and thank you once again! Cheers!.

 

[Sive Morten]

Last week, I have been trading the EUR/USD....

Hi Rahman,
Yeah, haven't seen you for long time here.. this is great that you're again with us, (I like to read your comments).
GBP actually is still in my focus. I feel somehow that upside action is not done yet... Anyway, EUR is also interesting.
I'm glad that my analysis is useful for somebody... I'll try to do my best.

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices rose for a fourth day on Tuesday as the dollar eased on signs of slower economic activity in the United States that dented expectations of an aggressive string of interest rate hikes by the U.S. Federal Reserve.

The New York Federal Reserve bank said on Monday its Empire State Manufacturing Activity index, a report on business activity in the state, unexpectedly fell in May, sinking into negative territory for the first time since October. The weaker-than-expected report could be a harbinger a possible deterioration in the U.S. manufacturing sector.

Spot gold gained 0.3 percent at $1,233 per ounce at 0403 GMT. On Monday, it touched its highest since May 4 at $1,237.26. U.S. gold futures were up 0.3 percent at $1,233.60 an ounce.

"In the shorter term it (weaker U.S. data) could lift gold prices to a certain extent as it ensures the pace of the
interest rate hikes do not accelerate," said Mark To, head of research at Hong Kong's Wing Fung Financial Group.
Expectations of a U.S. rate increase in June fell to 74 percent compared to 84 percent last week, according to the CME Fedwatch. Higher interest rates tend to boost the dollar and push bond yields up, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion. Risk aversion sentiment due to recent global developments including the North Korean missile test, the massive "ransomware" cyber attack and controversies surrounding U.S. President Donald Trump could lift gold prices over the next two
weeks, Wing Fung's To added.

Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold may rise more to $1,245 per ounce, as it has cleared a resistance at $1,233, according to Reuters technical
analyst Wang Tao. Paulson & Co held its stake steady in the world's biggest gold exchange-traded fund while Soros Fund Management stayed out of the precious metal in the first quarter of 2017, when bullion prices rallied to 3-1/2-month highs, a filing showed on Monday.

In the wider markets, the dollar index traded near a one-week low versus a basket of major currencies on Tuesday. Among other precious metals, silver rose 0.6 percent at $16.69 an ounce.

"Although there is increasing evidence of a bottom being formed in both gold and silver, we would like to see a bit more "staying power" before choosing to engage more aggressively on the long side," INTL FCStone analyst Edward Meir said.

Well, on gold market price action mostly corresponds to our suggestion that we've made in weekly research. We continue to watch here for some DiNapoli pattern. As price already shows 3 closes above 3x3 DMA and has not reached Fib resistance - we haven't got B&B "Sell" pattern. Thus, DRPO "Buy" the only pattern that could be formed...
Second issue that we will be watching today is possible bearish grabber. If it will be formed - it could be used as isolated trading setup for scalp trade and, it will bring more confidence of DRPO, as it will suggest drop below previous lows:

On 4-hour chart all this stuff could take a shape of reverse H&S pattern. Market right now has completed AB-CD target around Fib resistance and MPR1. This is also area of possible neckline. Thus, downward retracement here also looks logical.

That's being said, we do not have entry point yet, but situation looks transparent and it should be formed in nearest time.

 

[Sive Morten]

Good morning,

(Reuters) - Gold hit a two-week high on Wednesday as Asian stocks slipped and the dollar fell amid political
uncertainty after a source said U.S. President Donald Trump asked the FBI to end a probe into his former security adviser.

Spot gold climbed 0.6 percent to $1,243.34 per ounce by 0422 GMT, after earlier touching its strongest since May 3 at $1,244.70. Gold has risen for five days straight. U.S. gold futures were up 0.6 percent at $1,243.20
an ounce.

Trump asked his now dismissed Federal Bureau of Investigation (FBI) Director James Comey to end a probe into ties between former national security adviser Michael Flynn and Russia, according to a source who has seen a memo written by Comey. The memo raises questions about whether Trump tried to interfere with a federal investigation. The White House denied the report.

"An inhererently weaker dollar was seen because of the Trump rhetoric," said analyst Barnabas Gan at OCBC. "Safe-haven demand because of Trump and geopolitical tensions, especially arising out of North Korea's missile test, is lifting gold prices." "People could be looking for a short-term support at $1,240
levels," he added.

Distractions at the White House lower the chances of the administration enacting legislation that is important to markets, namely tax and regulatory relief as well as infrastructure spending, said INTL FC Stone analyst Edward Meir.

"A lack of progress on these issues should theoretically contribute to the Fed holding a more dovish course for longer, hurting the dollar and possibly equities in the longer term, but likely proving beneficial for gold," he said.

The U.S. Federal Reserve is still likely to raise interest rates next month, with futures traders pricing in a 74 percent chance of a hike. But it is unclear if the Fed will raise rates later this year, which would be supportive for holders of non-interest bearing gold.

Spot gold faces a resistance at $1,245 per ounce and may temporarily hover below this level or retrace to a support at $1,237.26 before retesting this barrier, according to Reuters technical analyst Wang Tao.

The dollar index , a measure of the greenback against a basket of six major currencies, fell to its lowest since Nov. 9 and last stood at 97.942. MSCI's broadest index of Asia-Pacific shares outside Japan was down 0.5 percent.

On gold market we continue to watch for possible B&B "Sell". Today market finally has reached 1245 Fib resistance. Although this has happened by 4candles above 3x3 DMA, but not 3 as it is suggested by DiNapoli and pure B&B, we still could treat it as potential B&B "Sell":

On 4-hour chart we see that this is not just Fib level, but K-resistance area. Also, some extension targets stand around. So, all background for potential B&S stands in place. Now we need just to get bearish reversal pattern on hourly chart that will let us to take short position:

 

[Sive Morten]

Good morning,

(Reuters) - May 18 Gold prices held steady on Thursday after jumping about 2 percent the session before, buoyed by political uncertainty in the United States and tempered expectations for an aggressive string of U.S. interest rate hikes.

* Spot gold was flat at $1,259.99 per ounce by 0055 GMT, after earlier touching its strongest since May 1 at
$1,263.02. It rose about 2 percent on Wednesday in its biggest one-day percentage gain since June last year.

* U.S. gold futures were up 0.1 percent at $1,260 an ounce. The dollar stood near six-month lows against a basket of major currencies on Thursday as the U.S. political crisis appeared to deepen, and likely to delay any efforts by President Donald Trump to carry out his economic stimulus plans.

* The U.S. Justice Department on Wednesday appointed former FBI Director Robert Mueller as special counsel to investigate possible collusion between Trump's 2016 campaign team and Russia as well as alleged Russian interference in the U.S. election.

* Investors were shelving rosy hopes for U.S. tax reform and rethinking strategies premised o Trump's economic growth promises on Wednesday, as the President faced his loudest criticism yet over possible collusion between his election campaign and Russia.

* Minneapolis Federal Reserve Bank President Neel Kashkari on Wednesday warned against using interest rate hikes to address unwanted asset bubbles, saying that bubbles are hard to identify and such hikes would likely do more harm than good.

* U.S. mortgage application activity recorded its steepest drop since December, retreating from an eight-week high, as various home borrowing costs held steady or rose modestly, according to Mortgage Bankers Association data released on Wednesday.

* UBS's U.S. economists on Wednesday said they expected the Fed to increase interest rates at its June and September policy meetings, earlier than their prior forecast on such moves at their July and December meetings.

* Indian gold imports will drop back sharply after jumping in the first quarter, the World Gold Council said on Wednesday as the launch of a new tax regime and restrictions on refiners' ability to import gold dore take
their toll.

So, on gold market we have reflection today's JPY setup. Actually the same scenario and analysis but in opposite direction...

On daily gold market has formed B&B "Sell" Look-alike pattern (LAL). We treat it as LAL by two reasons - 4 candles above 3x3 instead of 3, and, too deep upside action, right to 5/8 Fib resistance. That's why it makes trading process a bit sophisticated:

On 4-hour chart recent rally by itself is a good thrust up. That's why today we will be watch only for 4-hour patterns.
- If we will get DRPO "Sell" here, we go short with 1235 target. It means that daily B&B will start by DRPO "Sell" on 4-hour chart;
- If we will get B&B "buy" here, then we will trade it separately and then will be watching for bearish reversal patterns. No patterns - no trading of B&B "Sell" on daily. If we will get pattern, then we will use it for short entry.

Thus, as you can see, trading activity will depend on patterns that we will get today:

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices edged up on Friday and were on track for their biggest weekly gain since mid-April as the dollar eased and Asian stocks weakened amid ongoing political turbulence in the United States.

The metal slipped 1.1 percent on Thursday on profit-taking, its biggest one-day percentage drop since May 3 and snapping a five-day rally.

"The gold rally was overdone and there was a correction on Thursday. But perhaps, it came down a little too much from the highs of yesterday. So people started to pick up again," said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore. "People are still wary of geo-political risks and not selling the safe-haven asset yet."

Spot gold had risen 0.3 percent to $1,249.76 per ounce by 0329 GMT. It was up about 1.8 percent for the week, set for its biggest weekly rise in five. U.S. gold futures were down 0.3 percent at $1,249.60
an ounce. The dollar traded above six-month lows against an index of six major currencies on Friday but was down 0.1 percent after gaining some reprieve overnight, helped by solid U.S. economic data. New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labor market slack.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent.

"Safe-haven buying has provided strong support to gold prices over the past six months," ANZ said in a note.
"However, rising geopolitical risks in the U.S. and elsewhere are likely to propel prices even higher, despite the spectre of a rate hike in the U.S. next month."

Investors will watch with renewed focus next week's testimony to the Senate by former FBI Director James Comey. Comey's firing by U.S. President Donald Trump last week set off a political firestorm and culminated on Wednesday in the Justice Department's appointment of a special counsel to probe possible ties between Russia and Trump's 2016 presidential campaign.

Spot gold is expected to test resistance at $1,255 per ounce, as it has stabilised around support at $1,245,
according to Reuters technical analyst Wang Tao.

Holdings in SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, fell 0.14 percent to 850.71 tonnes on Thursday.

So, gold market has not provided us any trading setup for a long time, but right now we have two. On daily chart yesterday B&B "Sell" has been formed, but it is not time to go short yet.

While we're wating solution for daily pattern - today we mostly will work with 4-hour chart. Here we have isolated B&B pattern but on the "Buy" side. It has target at 1257 area:

Once it will be completed - it will be the moment to think about daily pattern again. Because upside action to 1257 area could become a BC leg of large AB-CD pattern. And particularly this pattern we will try to use for trading of daily B&B "sell" and target around 1230 area.