GOLD PRO WEEKLY , November 28 - 02, 2016

Sive Morten

Special Consultant to the FPA
Messages
14,204
Fundamentals

(Reuters) Gold prices steadied after falling to 9-1/2 month lows on Friday, heading for a third consecutive weekly decline as investors sold on factors including expectations of a U.S. interest rate rise. Spot gold was down 0.03 percent at $1,182.88 an ounce by 2:15 p.m. EST (1915 GMT), after tapping $1,171.21, its lowest
since Feb. 8, as funds took profits on short positions. The precious metal has fallen more than 7 percent so far in November, leaving it on track for its largest monthly fall since June 2013.

U.S. gold futures settled down 0.9 percent at $1,178.40, after dipping to their lowest since Feb. 5 at
$1,170.30.

"Investors are still retreating from gold, though prices falling below $1,200 has promoted some profit-taking," said Commerzbank analyst Eugen Weinberg. "Gold is being driven by many factors including equity
markets, currency markets and expectations of higher U.S. interest rates, which are going to be a huge burden."

Equity markets have rallied since Donald Trump won the U.S. presidential election. "The rising dollar, yields and U.S. equity prices all weighed on the appeal of the buck-denominated, non interest-bearing and perceived safe-haven precious metal," said Fawad Razaqzada, technical analyst for Forex.com. "In terms of the dollar, the slight weakness we have observed at the end of this week could very well turn out to be temporary even if a December rate rise may already be priced in."

Though the U.S. dollar fell against a basket of major currencies on Friday, it was on track to close higher for the third straight week after reaching the highest since March 2003.

Markets are now pricing in a nearly 100 percent probability that the U.S. Federal Reserve will raise rates at its December meeting, according to CME FedWatch. That would further boost the dollar, making commodities more expensive for holders of other currencies. Overall holdings of physical gold in exchange traded funds
(ETF) have fallen more than 5 percent to 54.135 million ounces since Nov. 9, the day after the election.

"A further test of the downside cannot be ruled out just yet, especially as ETF liquidations persist," UBS analysts said in a note. Traders say the U.S. monthly jobs report due on Dec. 2 will be key to market sentiment.


COT Report

Here we see massive contraction of long positions. As you can see, net position has dropped significantly, open interest has decreased as well. Position dropped 2 times, open interest almost for 250 K contracts. Still, net position is still rather high, compares to it's historical value.
upload_2016-11-27_14-11-4.png


Here is performance of SPDR holdings. Take a look - on first drop of gold, SPDR holdings has not changed, even grown slightly, while on current performance we see starting sell-off. Previously when this kind of divergences happened - gold has shown "failure" reversal and uptrend continues. You can see that this has happened twice in June. But right now, as SPDR holdings support downward action - this tells that this is real contraction of long positions by inverstors.
upload_2016-11-27_14-25-4.png


Technicals
Monthly


As COT report mostly has completed its role and predicted first drop, now we again should pay more attention to technical picture, to estimate destination point of current bearish action on long-term analysis.

Monthly picture currently supports our suggestion on deep retracement, this is just how markets work. Sooner or later but this retracement should have happened and now it stands underway.

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. Probably it should happen but 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.

As market slightly has moved above YPR1 and our K-resistance area, something is starting to form here, I mean pattern by which long-term global trend could change on gold. Price has formed nice bearish engulfing right around this area and now gold is following to its signal

Take a careful look at the picture - here we could recognize 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...

Finally take a look at action on downward slope and upward one of the head - last move down was slower than current move up. All these moments point on possible H&S pattern here.

Now gold stands at the area where the bottom of right shoulder should be formed. Thus, our first step on this long-term time frame has been completed - "we suggest further drop on gold, at least to 1160-1180 area."

Now we're coming to second step how we've specified it - "watch for validity of H&S pattern." Right now there is an issue exists that we do not like. This is too fast drop. Actually right shoulder is an area where bulls should gradually take control over the market and fast drop here is not a good sign. Still, our task here is relatively simple - just to watch for reversal patterns on daily that confirm bullish reversal and monthly H&S pattern. If we will not get any - then we will not go long, and it will mean that this H&S could fail. The failure of this pattern will lead price below the head, i.e. under 1000$ level.

Conversely If H&S really will work, we expect new long-term bullish trend on gold market that should lead to new highs on 2000$+ levels. It means that 1160-1200 area should be treated as strategical point for long entry.

So, you could imagine the value of bets around this pattern...

Now market comes closer to MACDP line, so it would be perfect if gold will reach our predefined level and simultaneously form bullish monthly grabber... Let's watch for it...
gold_m_28_11_16.png


Weekly

As gold has reached pre-defined support on weekly chart, and H&S pattern here has completed its mission, we will take a look at weekly chart from different angle today. Since our task right now is to estimate validity of monthly H&S pattern, this picture could help us to specify important moments in this task:
gold_w_28_11_16.png


As this rally has started gold has broken up long-term downward channel. This was a sign of changing trend on gold. Right now market returns back to re-test it from opposite side. In general, this is very typical action for gold market. Gold has some habits, such as deep retracements, early reversal traps and others. And one of them is re-testing important levels.
So, around 1170 area we have not just broken channel border, but also major 5/8 Fib level and weekly oversold. Border itself stands slightly lower, around 1150$. Here we should understand two things. First - the strength of this support is sufficient to hold real bullish market and to stop downward retracement. Second - price drop right back into channel will be bearish sign, and this could give us early alarm, even prior monthly H&S will fail.
That's being said, right now on gold we will not just watch for bullish reversal patterns on daily but also keep an eye on 1150-1170 area and control, whether gold will hold above it or not.

Daily

Currently we can't make any detailed analysis on daily chart, since dropping just has stopped, and it's too few time has passed since then. Thus no patterns have been formed yet here. Daily picture also shows that AB-CD pattern has reached 1.27 extension that creates an Agreement with major Fib support level.
First bulk of patterns that we will be watching for are based on thrust. And they will be DiNapoli directionals. Appearing of DRPO "Buy" looks more reasonable in current situation. These patterns are faster, while more extended patterns as butterflies, H&S etc need more time to be formed:
gold_d_28_11_16.png


Hourly
On hourly chart all these stuff could start from small H&S pattern. As you can see gold keeps well upside harmonic retracements, and here it already has completed it. Thus, if somehow it will run higher, this could become a sign that some pattern is forming. Neckline of this H&S coincides with WPP.
At the same time, guys, don't be decieved by time scale. Hourly is too small to test monthly patterns. It could bring just first signs, but they should lead to appearing of patterns on daily chart... That's being said, major time frame is daily, there we should get something that either will confirm monthly H&S reliability or bring early signs of its failure.

gold_1h_28_11_16.png


Conclusion:
As market has completed first step of our long term analysis - dropped to 1170 area, now we're turning to second step - estimating of validity of monthly H&S pattern.

Our task on short term charts are relatively simple - watch for patterns that either will confirm monthly H&S pattern or refute it.


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

Special Consultant to the FPA
Messages
14,204
Good morning,

(Reuters) Gold slipped on Tuesday as the dollar steadied, with markets on edge ahead of a meeting this week that could see oil producers curb output.

Spot gold was down 0.2 percent at $1,191 an ounce by 0559 GMT. It gained 0.9 percent in the previous session. U.S. gold futures were slightly down at $1,190.10 per ounce.

"People will be likely watching the OPEC (Organization of the Petroleum Exporting Countries) meeting. If the meeting leads to higher oil prices, that should have some inflationary pressure across the global economies, especially the U.S. and that could lead to lower gold prices," said Barnabas Gan, an analyst at OCBC Bank in Singapore.

Since gold and crude oil are dollar-denominated commodities, they are strongly linked. "Gold could see a better tone this week assuming that the dollar takes a bit of a breather from its upward advance and if
U.S. equity markets pause after several weeks of heady gains," INTL FCStone analyst Edward Meir said in a note.

"The wild card remains oil. A failure by the OPEC to agree on a credible production cut could send prices (oil) sharply lower and drag down gold with it." "Conversely, we could see the dollar weakening as a result
of oil selling off, so at this stage it is not necessarily clear what direction gold will take," he said.

Oil prices fell early on Tuesday on doubts over a meaningful output cut during Wednesday's meeting.
The dollar index, which measures the greenback against a basket of currencies, was steady at 101.260.
Global growth will pick up faster than expected in the coming months as the U.S. President-elect Donald Trump administration's planned tax cuts and public spending fire up the U.S. economy, the Organisation for Economic Cooperation and Development said on Monday.

Also weighing on bullion was a highly anticipated U.S. interest rate hike in December by the Federal Reserve, which is due to next meet on Dec. 13-14. "The probability of a rate hike is 100 percent. Market
watchers are looking for a hike and that's why prices are so weak - under $1,200," OCBC analyst Gan said.
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.

Speculators cut their net long positions in COMEX gold and silver contracts in the week to Nov. 22.


Today guys, I think it would be better to take a look at AUD. Gold price action is not impressive by far, while on AUD we have clear trading setup.
We've started it's discussion on Friday, and it could be B&B "Sell" LAL pattern. LAL is because we do not have 8 bars in bearish thrust, but only 6. Still, as they are rather strong, B&B has not bad chances to work as it should...
So, on daily we have thrust down, and reaching major resistance within 3 closes above 3x3 DMA. Resistance is rather strong, since this is K-area and also is accompanied by WPR1:
aud_d_29_11_16.png


On 4-hour chart we see completion of AB=CD pattern and minimal target of B&B, if it will work, of course...
aud_4h_29_11_16.png


Finally, on hourly chart AUD has finished AB=CD pattern by 1.618 butterfly, which is bearish reversal pattern. Thus, as you can see all background for starting B&B "Sell" has been done. Nothing more to expect and B&B should either start or fail...
aud_1h_29_11_16.png
 

Sive Morten

Special Consultant to the FPA
Messages
14,204
Good morning,

(Reuters) Gold was on track for its biggest monthly decline since June 2013, largely pressured by an imminent U.S. interest rate hike by the Federal Reserve in December on expectations of improving economic growth.

Spot gold on Wednesday was nearly unchanged at $1,188.86 an ounce by 0627 GMT. U.S. gold futures were flat at $1,187.90 per ounce. Spot gold was down 6.83 percent so far this month. Bullion has lost $150 from a Nov. 9 post U.S. election high of $1,337.40 per ounce, hurt by a rally in the U.S. dollar on surging Treasury yields as investors believed President-elect Donald Trump's policies would invoke faster inflation.

"Markets seem to accept Trump as good for business," said Joshua Rotbart, managing partner at Hong Kong-based bullion services provider J. Rotbart & Co. "His statements about increasing investments in
infrastructure, tax reform aimed at strengthening local businesses and import reforms to prioritize local businesses have increased growth expectations," he added.

"This has triggered a risk-on trend which has seen cash flows from gold-backed securities to risky assets like equities." The dollar on Wednesday edged up as U.S. debt yields resumed ascent. The U.S. economy grew faster than initially estimated in the third quarter, notching up its best performance in two years, buoyed by strong consumer spending and a surge in soybean exports.

The case for raising U.S. interest rates has "clearly strengthened" since early November, before Americans elected Republican Donald Trump as president, Federal Reserve governor Jerome Powell said on Tuesday in the latest signal that a policy tightening is imminent.

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. Oil markets were jittery on Wednesday ahead of an OPEC meeting later in the day, with members of the producer cartel trying to thrash out an output cut to curb oversupply.

"The impact of an OPEC deal on gold would be tricky to assess," said Edward Meir, an analyst with INTL FCStone. "A failure by OPEC to agree on a credible cut will send oil prices sharply lower and possibly drag gold down with it. However, we could see the dollar weaken as a result of oil selling off and this could boost gold," Meir said.


On gold market we have very similar action to EUR. Today we could get bearish grabber pattern on daily chart that could lead to new lows, but at the same time chances on DRPO pattern could be held, if gold will drop too far:
gold_d_30_11_16.png


On 4-hour chart gold forms pennant pattern with signs of bearish dynamic pressure - trend has turned bullish but price action is not. We've seen the same situation just recently - take a look at price action before last drop:
gold_4h_30_11_16.png


If our suggestion will correct - gold could form butterfly "Buy" pattern with destination point around 1164$ area. With coming OPEC meeting, we think this is very probable, because we believe that hardly they will come to agreement on oil extraction freezing...
gold_1h_30_11_16.png
 

Sive Morten

Special Consultant to the FPA
Messages
14,204
Good morning,

(Reuters) Gold prices recovered slightly after touching a near 10-month low in early trade on Thursday as the dollar index eased, but growing odds of a U.S. interest rate hike capped further gains.

Spot gold was up 0.25 percent at $1,175.36 an ounce by 0711 GMT. The metal hit its lowest since Feb. 5 at $1,163.45 earlier in the session. U.S. gold futures rose about 0.3 percent to $1,173.80 per ounce.

The dollar index, which measures the greenback against a basket of major currencies, eased 0.26 percent to 101.240.

"Gold has been sensitive to the U.S. monetary policy and dollar movements," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. "Inflation as well as pace of interest rate hike expectations among the investors are increasing along with the opportunity cost of holding gold."

The metal has been under constant pressure from a strong U.S. dollar and climbing Treasury yields since President-elect Donald Trump's policy plan signalled faster inflation. Strong U.S. data on Wednesday pointed to economic strength which could further cement the case for an interest rate hike from the Federal Reserve this month.

Dallas Fed Bank President Robert Kaplan suggested on Wednesday it was time for an interest-rate raise as the U.S. economy was making good progress toward full employment with inflation heading toward the Fed's 2 percent goal.

Traders see about a nine in 10 chance that policymakers will raise rates when the Fed meets in December.
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.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.13 percent to 883.86 tonnes on Wednesday.

Elsewhere, political uncertainty in Europe persisted ahead of Italy's referendum on Sunday, capping the euro, while European Central Bank (ECB) President Mario Draghi warned of risks to the continent's prosperity.

Euro zone inflation hit a 31-month high in November, providing modest relief for the ECB ahead of an interest-rate decision next week.

"Any rise in geopolitical risks or investor uncertainty in the months ahead may spur demand for perceived 'safe-haven' assets, especially gold, but also silver," said James Steel, chief metals analyst for HSBC Securities.


On gold market our suggestion was correct - on a positive US stats gold has dropped further, right to 1160 area and has completed bearish grabber that we've discussed. As ADP report was positive, it is a high chances on positive NFP numbers as well, so this is a real question what will happen on gold market. But as we've said previously - the second stage of our long-term trading plan is very simple. Just watch for reversal patterns on daily. No patterns - no position. At the same time it is few time has passed since gold reached 1170 support, so we need to wait a bit more and see what will happen here:
gold_d_01_12_16.png


On 4-hour chart our bearish dynamic pattern has been completed - and gold has dropped below lows, i.e. completed its minimum target:
gold_4h_01_12_16.png


This drop was in shape of butterfly. Speaking about potential reversal here guys, the only way how it could happen here, is if butterfly will become a part of H&S pattern. But anyway, this scale will be too small for daily chart. At maximum, it will become just a first step in some daily pattern and suitable only for scalp traders.
gold_1h_01_12_16.png


We do not need to be hurry here. Time stands on our side and our task is to get clear pattern, because prize is a entry point for long-term trend and it will be pitty if we will make a mistake here.
 

Sive Morten

Special Consultant to the FPA
Messages
14,204
Good morning,

(Reuters) - Gold recovered from its lowest since early February on Friday as the dollar drifted lower ahead of U.S. jobs data, but is still on track for a fourth consecutive weekly decline.

Spot gold was up 0.2 percent at $1,173.59 an ounce by 0612 GMT. The metal fell to its lowest since Feb. 5 at $1,160.38 in the previous session. For the week, gold was trading down 0.8 percent. U.S. gold futures gained 0.5 percent at $1,175.30 per ounce.

"These movements in gold can be tied to the dollar," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong. "There is a bit of buying in the physical side, but that has not been really aggressive."

The dollar index, which measures the greenback against a basket of major currencies, fell about 0.3 percent on Friday to 100.770 as investors remained wary ahead of U.S. payrolls data due later in the day.
"Most market participants are awaiting the crucial non-farm payrolls (NFP) data due today. A positive outcome could mean the Federal Reserve can raise interest rates in the next meet," said Hareesh V, Research Head at Geofin Comtrade Ltd. The dollar has scaled back from near 14-year highs of 102.05
hit on Nov. 24 on the back of a surge in U.S. Treasury yields triggered by expectations of higher fiscal impulse and faster pace of monetary tightening under president-elect Donald Trump.

Several Fed policymakers have since expressed confidence in the U.S. economy and signalled a possible near-term interest rate hike. Gold is highly sensitive to rising interest rates, as these lift the opportunity cost of holding non-yielding bullion, while boosting the dollar.

"People are rushing to the stock market rather than the gold markets. That is evident in the liquidation we are seeing in the exchange traded funds (ETFs)," Leung of Lee Cheong Gold Dealers added.

Holdings of the largest gold-backed exchange-traded fund, SPDR Gold Trust, fell 1.54 percent to 870.22 tonnes on Thursday. Holdings have fallen over 6 percent last month.

Spot gold may bounce moderately into a range of $1,184 to $1,194 per ounce, according to Reuters technical analyst Wang Tao.


Here guys, it's a really big chance on drop right to next 1120 AB-CD target. Market stands at major support but we do not have any minor hint on possible reversal here. Joining this with expectation of good NFP release makes a deadly combination for a bulls...
gold_d_02_12_16.png


On 4-hour chart gold stands in gradual downward channel and to think about any retracement, it should, probably, at least break it up. But no hints on this issue are visible right now:
gold_4h_02_12_16.png


The only pattern that we theoretically could suggest is H&S on hourly chart, although it is very difficult to believe that it really will be formed. Current upside action is just a technical one, profit taking and preparation for NFP release. If butterfly will become first part of H&S and gold will reach neckline around 1200 - in this case, yes, may be retracement will get chance. But we treat this chances as phantom:
gold_1h_02_12_16.png
 
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