GOLD PRO Weekly October 27-31, 2014

[Sive Morten]

Fundamentals
Weekly Gold Tading Report prepared by Sive Morten exclusively for ForexPeaceArmy.com
As Reuters reports Gold edged lower on Friday and closed down for the week as rallying equity markets and strong U.S. economic data dented demand for the precious metal as an insurance against risk.
Sales of new U.S. single-family homes rose to a six-year high in September, but a sharp downward revision to August's sales pace indicated the housing recovery remains tentative.
Bullion notched a 0.5 percent weekly loss, after two consecutive weekly rises driven by renewed worries about global economic growth.
"A better run of U.S. data has calmed nerves about the wider economy, and that has put pressure on gold in the past few days, as it had been enjoying a safe-haven bid," said Matthew Turner, an analyst at Macquarie.
In gold's official-sector news, a proposal to prohibit the Swiss National Bank from selling any of its gold reserves has the support of 44 percent of the public, though that result falls short of the backing it needs to become law, a closely watched survey showed.
Holdings in SPDR Gold Trust , the world's top bullion exchange-traded fund, fell to their lowest level since late 2008 this week in a sign of lingering bearish sentiment in the bullion market. The fund this week recorded its biggest daily percentage drop in holdings in a year, despite a price jump to a six-week high.
The U.S. Federal Reserve's policy meeting on Tuesday and Wednesday will be the next major focus for the market. The consensus view is for the U.S. central bank to decide to wrap up asset purchases under its third round of quantitative easing. Investors will be looking for any clues on the possible timing of an interest rate increase.

Source: CFTC, Reuters
CFTC Report shows growth in net long position but flat open interest data. It means that net long position has increased due closing of shorts rather then opening new long positions. This is important but does not confirm reversal yet. When true reversal comes – net long position should grow simultaneously with open interest.
Monthly
October month as you can see shows mostly flat action. Currently on long term gold we have, let’s call it two big clusters on of analysis. First cluster is “certainty”. It tells that we have two patterns in progress. Frist one is monthly bearish stop grabber, that has minimum target at 1180. Second one is Volatility breakout (VOB) that suggests at least 0.618 AB-CD down. And this target is 1050$. Butterfly pattern that we see on monthly chart is not very important and just shows how this downward action could happen. 1.618 extension of Butterfly coincides with VOB 0.618 AB-CD target.
Second cluster is “uncertainty”. This pack of information rises questions. Whether market will clear 1180, how far market could move below 1180 – 1100, 1050? We can’t answer on second question yet.
Why we still think that market should clear out 1180 lows? This expectation mostly is based on gold habits and overall fundamental situation. Gold habits suggest that market almost never leaves behind significant lows. Technically current retracement seems absolutely logical and not overextended. Market just re-tested 1240 lows – and this is also one of the habit of the gold market.
Fundamentally economy data is not really bad, right now is confirmed by US companies earning reports, weak physical demand and anemic inflation – all these moments prevent gold appreciation. Fall of crude oil prices also is supporting factor for economy in long term, because household and industry will get signficant economy on energy expenses, especially on coming winter. Also we have to say that active part seasonal bullish trend will finish in December. Currently it should be mostly active, but right now we see that Asian physical demand is not enough to push market higher, when instituational investors stand flat and do not put money in gold.
Technically during recent rally market was not able to re-test Yearly Pivot. In the beginning of the year market has tested YPP and failed, then continued move down. During recent attempt to move higher – has not even reached YPP again.
So may be we should have some concern on possible end of downward action and upside reversal, but right now we just do not see any foundation and reasons for that. As we’ve said million times – we do not believe much in current rally, because it is absolutely unclear what it is based on, except may be individual demand in Asia.
That’s why somehow we still think that we will get another leg down to 1180. After that the time will come to answer on second question – whether market will break this level and how deep it will fall.
That’s being said, situation on the monthly chart does not suggest yet taking long-term long positions on gold. Fundamental picture is moderately bearish in long-term.
Recent retracement on many markets – oil, equities, gold is mostly triggered not by sentiment changing but strong oversold. Markets probably overreacted a bit under pressure of Ebola fever spreading, surprisingly bad data from China and EU, sophisticated geopolitical situation. All these factors have coincided and hit markets. Right now situation has got some relief, but on Friday gold already has turned down.

Weekly
On weekly chart market has reached strong support area that includes targets, MPS1, butterfly extension and others. As you can see gold has confirmed this level by nicely looking weekly engulfing pattern that has led to upside retracement. We suggest that even action to 1260 will not lead to breaking bearish sentiment and will not mean that downward trend is over.
Even Vice versa, as we’ve said above taking in consideration gold’s habits, we could suggest that 1180 will be reached and washed out. We suggest that current move up is some sort of bulls’ trap to involve more traders in upside action and then grab their stops either. It does not mean that you can’t trade it up, but it means that you have to take profit fast.
We also know that until MPR1 holds upside retracement – bearish trend stands valid. It means that market could show retracement even into 1260 K-resistance area and WPR1 and this will not mean that bearish trend has been broken. Somewhere around stands the target of engulfing pattern. At the same time this level simultaneously will become an indicator of breakout. Any action above MPR1 will suggest that sentiment has changed and this is not just retracement already. But currently market just has reached nearest resistance and done this not very steadily. Last week market has bounced down from resistance and closed below MPP again. Two weeks in a row candles have long upper shadows. This indicates that market has not enough power to hold above this resistance. And this seems reasonable, since we do not have any real purchases that could give gold this power.
On coming week price will approach to MACDP and we will closely look for grabber. It could come because volatility probably will increase due Fed meeting.
That’s being said, weekly chart leads us to conclusion that right now as market has some upside reserve – it is too early to treat it as reversal and shift in long-term sentiment. Still, we can’t exclude this scenario totally, as we see some shifting in CFTC data, although it is mostly anemic by far. The key to success here is to keep watching on combination of action, patterns and CFTC/SPDR data around important 1260 area.

Daily
As we’ve mentioned on Friday – we’ve got evening star pattern right at daily resistance and former 1240 lows that were re-tested. Right now major question is whether market will show just retracement and then AB=CD up or this is really reversal and road to 1180. First of all, evening star pattern could lead to as first scenario as second one.
The only clue that we have here is WPS1 and daily oversold level. They stand above 1180. Hardly market will move lower immediately, and it means that for the next week we will not take into consideration 1180. Mostly our downside target will be WPS1, may be some fib support and daily oversold. This is probably maximum that gold will be able to reach, even having Fed meeting on the back.
Another pattern that could be formed within 1-2 trading sessions, and we’ve talked about it as well on Friday, is bullish grabber. It is interesting that bullish grabber here absolutely does not contradict with possible bearish one on weekly chart.

4-hour
This chart shows that harmonic retracement swing has been broken and market doubles it. In recent couple of sessions market was forming bearish flag pattern that suggests downward continuation. We do not have any tools here to estimate possible target clear, but based on flag’s mast – gold really should reach WPS1 and daily oversold.

1-hour
Speaking about action inside flag here is two scenarios are possible. As ou can see we have bullish grabber that suggests taking out of recent highs. This could lead to some AB=CD pattern that will let market to touch WPP. This will not break overall situation on 4-hour chart with flag but just postone a bit downward action.
If grabber will fail, situation could turn to butterfly pattern. 1.618 level coincides with WPS1 area.

Conclusion:
Situation on gold market remains sophisticated. Due bearish moments, such as bullish USD sentiment, lack of physical demand, gold has re-established recently downward action. On a way down market could pass through multiple target and nearest one is 1180$. We even have setup on big picture that suggests moving to 1050 area.
In short term perspective gold hardly will move to 1180 directly due WPS1 and daily oversold. That’s why on coming week we mostly will keep an eye on downward continuation to 1215-1219 area. Also we can’t exclude situation when gold still could form AB-CD retracement up. This setup could come true if we will get bullish grabber on Mon-Tue and it will not fail.


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]

Gold Daily Update Tue 28, October 2014

Good morning

According to Reuters news Gold recovered after falling to its lowest in nearly two weeks on Tuesday as investors nervously awaited a U.S. Federal Reserve meeting that begins later in the day for clues about the timing of any interest rate hike.

The Fed is likely to announce the end of its massive bond-buying stimulus when it wraps up the two-day meeting on Wednesday. Investors will be scrutinising the Fed's statement for signals about a rate increase and its view on the global economy.

Gold could test resistance at $1,233 an ounce, according to Reuters technicals analyst Wang Tao.

"There were some stops triggered once we breached yesterday's low but China walked in and pushed up gold," said a trader in Hong Kong.

"People are nervous ahead of the FOMC and big position changes are unlikely. For the moment, I think we will hold between $1,220 and $1,240," he said, referring to the Fed's Federal Open Market Committee.

The Fed will likely reinforce its stated willingness to wait a long while before hiking interest rates after a volatile month in financial markets that saw some measures of inflation expectations drop worryingly low.

A delay in any hike in interest rates could boost gold, a non-interest-bearing asset.

With U.S. inflation weak, the European economy stumbling and the dollar on the rise, the big question is to what extent Fed officials acknowledge risks to their expectations that the U.S. recovery will continue to strengthen and allow them to raise rates around the middle of next year.

In the physical markets, data on Monday showed China's net gold imports from main conduit Hong Kong jumped to a six-month high in September as the world's biggest consumer stocked up ahead of its National Day holiday. But imports have slowed since the holiday, traders said, possibly putting more pressure on gold.



So, no big changes in gold's sentiment has happened. On daily chart trend has turned bearish, and we didn't get stop grabber that we've discussed in weekly research:

Currently guys, we probably could talk only on what could happen before Fed. If we will take a look at 4-hour chart - gold stands at support and forms bullish grabber that suggests upside action. Most probable short-term destination is 10$ target - WPP @1237.

hourly chart show approximately the same picture. As Butterfly "buy" has been formed, it's upside 1.27 target also stands around WPP:

Hardly market will brave enough to show greater action till Fed will announce it's statement.

 

[Sive Morten]

Gold Daily Update Wed 29, October 2014

Good morning


Reuters reports Gold steadied near $1,230 an ounce on Wednesday, clinging to modest gains from the previous session, ahead of the next guidance from the Federal Reserve on whether it will hike U.S. interest rates sooner or keep them lower for longer.

The Fed wraps up its two-day policy meeting later on Wednesday and is expected to end its bond purchases amid signs of strength in the U.S. economy.

But policymakers will likely reinforce its stated willingness to wait longer before raising interest rates after a volatile month in financial markets.

"The potential for surprise out of the Fed tonight is probably pretty low. QE (quantitative easing) will end but I don't think they'll deviate from what they've said previously," said Victor Thianpiriya, analyst at Australia and New Zealand Banking Group.

Data released on Tuesday gives the U.S. central bank reason to hold off from tightening its monetary policy, with demand for U.S.-made capital goods falling the most in eight months in September.

The U.S. housing sector also remained largely soft. The S&P/Case-Shiller composite index of home prices in 20 metropolitan areas gained 5.6 percent in August from a year earlier, the slowest annual increase since November 2012.

But Thianpiriya said the key threat to gold is the weakness in demand from China, the world's biggest consumer of the precious metal.

"To me the most important thing is that Chinese buyers have been absent for most of this year and that hasn't supported the price of gold," said Thianpiriya who sees gold slipping to $1,180 by December.

In 2013, China imported a record 1,158.162 tonnes of gold from Hong Kong - the main conduit for gold into the mainland - spurred by a 28 percent drop in global prices.

But Chinese demand has since waned with gold prices largely steady this year after recovering from 15-month lows reached in early October.

Gold prices need to move lower to spur physical demand in Asia, Standard Bank analyst Walter de Wet said in a note.

"Tactically, we still view gold rallies as short-lived and still favour approaching gold from the short side. Support is still resilient around $1,180. We expect physical demand to increase in strength on approach of this level," de Wet said.

Elsewhere, Russia increased its gold reserves for a sixth straight month in September, while Azerbaijan added to its holdings for a second month, according to data from the International Monetary Fund.

Well in general this stands in agreement with our expectations that we've talked about within several months. Gold heaviliy reacted on negative US data yesterday, although this was supportive for gold. This puts us to thought that currently there is no force that could trigger upside action on gold and we should be ready for downward continuation.
On daily chart comments are the same - yesterday, as we've suggested market has made an attempt to test WPP.

On intraday chart it is difficult to make definite conclusion. It seems that on 4-hour chart golds looks really heavy, no bounce after reaching of 3/8 support. Trend has shifted bullish but price action is not - reminds bearish dynamic pressure.

On hourly chart action is choppy but somehow reminds H&S. Thus, it is difficult totally deny possibility on shy upside action, at least on volatility on Fed speech. But it seems that current low will be the major point. IF market will break below it today - gold has chances to re-establish downward action

My personal feeling - I would better bet on donward action. It feels that bearish pressure is stronger right now. But this is just MHO, we do not call you to take shorts immediately.

 

[Sive Morten]

Good morning,

AS Reuters reports Gold fell to a three-week low on Thursday after the U.S. Federal Reserve ended its bond-buying stimulus programme and expressed confidence in the economic recovery, dimming bullion's safe-haven appeal.

Ending its monthly bond purchases, the Fed dropped a characterisation of U.S. labour market slack as "significant" in a show of confidence in the economy's prospects.

In a statement on Wednesday after a two-day meeting, the central bank largely dismissed financial market volatility, a slowdown in Europe and a weak inflation outlook as factors that might undercut progress towards its unemployment and inflation goals.

"The announcement struck us as coming across more hawkish than what the market was expecting," said INTL FCStone analyst Edward Meir.

"We think the next shoe to drop will come on Thursday when U.S. GDP numbers for the third quarter will be released. If the number comes in higher than 3 percent, as we suspect it will, we would not rule out another round of heavy selling in gold that could see us revisit the old lows of $1,180," Meir said.

The U.S. Commerce Department will release gross domestic product figures at 1230 GMT. The economy is expected to have grown at a solid 3 percent annual rate in the third quarter.

In a reflection of investor sentiment, SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 percent to 742.40 tonnes on Wednesday, a six-year low.

In the physical markets, too, buying interest fell. Premiums in top consumer China were about $1-$1.50 an ounce on Thursday, compared with about $2 on Wednesday.

"With the heightened negative sentiment, we expect to see even more scaled-up selling from the speculative community as well as producers who have been active on rallies over the last few weeks," said Alex Thorndike, senior trader at MKS Group.


This just confirms what we are talking about within recent months. As technically as fundamentally gold has no reasons to go higher. With recent numbers of Consumer confidence and earning results of US companies, GDP number probably will be good (may be Fed already knows it and gave corresponding comments).
We still think that gold stands on the road to 1180. This will be key to everything. Nobody will dare to predict what will happen there, but moving and holding below 1180 will lead to panic sell-off and further downward action to our ultimate 1050$ level, while W&R of 1180 and solid jump up will lead to deep upside retracement, probably even above 1300-1350 area. That's why this level is a corner-stone of long-term perpsective.
Now on daily chart market has moved below WPS1. MPS1 stands right around 1180. The one thing that could keep market from plunge is daily OS level and may be shyer GDP data today:

On 4-hour chart we have AB=CD that is mostly completed, but hardly this will stop market. Anyway, you can keep long-term shorts till 1180 and sell short-term rallies on a way down. Just be careful of GDP moment release. Market moves rather fast right now and provides almost no chances on additional enter.

If you search chances on long entry - wait 1180 and what will happen around it.

 

[Sive Morten]

Gold Daily Update Fri 31, October 2014

Good morning,
GUYS, I'LL BE ON VACATION 1-10 NOVEMBER. RESEARCHES, VIDEOS AND UPDATES WILL APPEAR AS THEY SHOULD, BUT A BIT LATER (1-2 HOURS) WITHIN A DAY.


Reuters reports Gold was struggling below $1,200 an ounce on Friday and looked set to post its worst week in seven. Gold and silver were hit hard after data on Thursday showed that U.S. gross domestic product came in at a higher-than-expected annual pace of 3.5 percent.

The metals were already facing some heat after the U.S. Federal Reserve earlier in the week largely dismissed financial market volatility, a slowdown in Europe and a weak inflation outlook as factors that might undercut progress towards its unemployment and inflation goals.

The hawkish comments and the strong economic data dulled gold's appeal as a hedge, as equities and dollar firmed up.

"The strong GDP data combined with the Fed's hawkish stance has put a stop to gold's recent rally," said a Hong Kong-based precious metals trader. "People are looking to reduce the size of their bet now as $1,180 is likely to be the next target."

Reflecting bearish sentiment, SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.16 percent to 741.20 tonnes on Thursday, a six-year low.
Gold failed to get any support from the physical markets, a factor that could likely push gold to further lows. Physical demand usually provides a floor to dropping prices.

Buyers in top consumer China failed to emerge despite the drop below $1,200.

Premiums on the Shanghai Gold Exchange - the main platform for physical trades in the country - slipped on Friday to less than $1 an ounce, occasionally even dropping to a discount against the global benchmark.

Premiums ranged between $1 and $2 on Thursday.


So, our medium-term target has completed. We do not call you to close shorts immediately, but tight stops. What we could say right now? Gold has cleared out 1180's and right now major question is wether this will be W&R or not. Currently it has no signs of W&R.
Also guys, pay attention that this has happened on seasonal bullish trend... Somehow I have a feeling that gold will continue move down. Market is strongly oversold on daily, and bounce up probably will happen in short-term perspective, but it seems that this is not the end...
Besides, yesterday Yamana Gold Company and Goldcorp has reported really bad earnings results. Goldmine equities has dropped 4-6%, while Yamana has lost 25% of its market value. SPDR reports on outflows... It smells like panic sell-off could follow. But let's not run ahead of train - we're at our target, let's see what will happen:

 

[Karpanov]

Have a nice vacation Sive!
Thanks for everything

 

[butcher]

Have a nice holiday Sive.

Take Care !