GOLD PRO WEEKLY, October 31-04, 2016

[Sive Morten]

Fundamentals

(Reuters) Gold rose 1 percent to the highest level in nearly four weeks on Friday, extending gains late in the session after the FBI said it will further investigate Democratic presidential candidate Hillary Clinton's
use of a private email system.

Just 11 days ahead of the U.S. presidential election, the news shook up the campaign, in which Clinton is the front-runner in opinion polls.

Spot gold was up 0.8 percent at $1,278.38 an ounce by 2:54 p.m. EDT (1854 GMT), after rising 1.3 percent to $1,284.14, the highest since Oct. 4. It is on track to close the week up 0.9 percent. U.S. gold futures settled up 0.6 percent at $1,276.80.

"The FBI headlines startled a somnolent gold market, driving bullion a percent higher in a hour on concerns that a late October surprise could suddenly bolster (Donald) Trump's sagging fortunes," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

"The rally may not last, though, as we are at the two-minute warning and Clinton is ahead by two scores, so it would require a truly shocking revelation to derail her chances." Wall Street and the dollar fell against a basket of six major currencies after the Federal Bureau of Investigation said it would probe additional emails related to Clinton while she was secretary of state.

The greenback was already weak, having shrugged off slightly better-than-expected U.S. third-quarter GDP data amid firm demand from Asia.

The U.S. economy grew by 2.9 percent in the third quarter, outpacing analysts' consensus forecast of 2.5 percent. The data strengthened the case for an interest rate increase, making non-yielding assets such as gold less attractive while boosting the dollar and U.S. treasuries. Demand for bullion in India is expected to pick up during the Dhanteras and Diwali festivals, when gold is traditionally given as a gift.

COT Data
Currently CFTC data is not as important for us as previously. Mostly it has completed its mission when pointed on overloaded long positions and predicted drop on gold. As drop has happened, speculative position right now stands at average level and mostly doesn't provide any specific information for us. Last week we see shy increase in long position and open interest.
Net speculative position is bullish, seasonal trend is also bullish on gold market right now. But actually it is not opposed to any direction.

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 - could you recognize here possible reverse 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.

If we really will get it - then we could make an assumption on possible depth of retracement. Now the bottom of shoulder stands approximately around 1160 area... Currently we could only gamble what event could push gold as low as 1160 again, but probably something will happen.

Our suggestion on initial drop was correct - growing psychological pressure among managers of Hedge and Mutual funds, good performance of gold in 2016, coming rate hike in Dec and overloading long positions forced traders to fix profit as soon as gold has dropped below 1300 area.

That's being said, taking together technical, fundamental and sentiment picture we suggest further drop on gold, at least to 1160-1180 area. Second step is watch for validity of H&S pattern. If it really will work (and we think that it should), then 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.

Weekly

On weekly chart market starts to show upside reaction on reached support area. As we've mentioned previously, on weekly chart we have two different scenarios. In short-term scenario we expect that some upward bounce should happen, at least if market is not dispeared totally. That is what already has started. Major reason - weekly oversold at K-support area. This is rather nice stimulus for upward bounce. Actually we have DiNapoli bullish "Stretch" pattern.

Second scenario - is a reversal bearish pattern. Here, guys, we could get H&S. Head stands precisely at 1.618 extension of potential left shoulder. So, we think that this is one of the patterns that we have to keep in mind. To be formed, market needs continue dropping (after minor bounce) somewhere to 1200 area and then start to form right shoulder. Target of this direct H&S, as AB=CD pattern leads us directly to the bottom of right shoulder on monthly chart... Overall, this combination looks really interesting.

But first - upward bounce. This situtation leads us to conclusion - do not take short position yet. Trading long is possible but more risky as you will go against major tendency, dealing with the "Stretch" pattern. We do not recomment to go long. But if you will decide to do this - try to get more confirmation, some bullish patterns on your back, use nearest targets etc...

Slow action and absence of thrust hints that this is not bullish reversal, but mostly reaction on strong support area. This in turn, leads us to conclusion that downward action should be re-established sooner rather than later.

Weekly picture shows that probable upside destination should be an area around 1290 level. Breaking up this area will be negative for bearish scenario. In this case market will vanish nasty black candle and return back in consolidation. This will crack normal bearish behavior. Thus, while market stands below 1290 - bearish setup is valid.

Daily
Picture on daily chart brings more confirmation to our suggestion on retracement character of upside action. Price shows smooth and gradual behavior. Actually, now we see classical continuation pattern - bearish flag. On Friday action market mostly has reached our K-resistance area, at least its lower border.

Currently we're coming to very thrilling moment of US elections on 8th of November. As you undertsand this could bring drastic shifts on markets, as due news speculations, rumors as real results of voting. It seems that situation will become more tighten as closer to Day we will be. Volatility probably could increase significantly.

Still, we will stand on our trading plan. As market stands very close to our predefined 1290 area, we will watch for reversal patterns on intraday charts.

Speaking on election results, we think that Trump will win. How it will impact on gold market? Some analysts think that it should push price down, but as I do not know what reasons have led them to this conclusion, I will not comment this scenario. The only reason, that may be has some sense, is difference Trump policy compares to current Democrats one. May be they based their analysis on this subject...

Intraday
Our setup for last week mostly has been completed. Our Friday's major condition was around 1265 area. As gold has held above it, no breakout has happened and upside action has continued.

Now price stands very close to our destination point around 1290 area. Upside 1.618 AB-CD target mostly has been reached. Thus, now major question is around possible bearish reversal pattern. Based on recent action, it seems that gold could form H&S pattern. If this idea will be confirmed by price action our major area it watch for is a top of right shoulder as most suitable area for short entry:

Read carefully!
Conclusion:
Perspective of 1-3 months looks bearish. We mostly are watching for reverse H&S pattern on monthly chart that should provide us strategical entry point around 1160-1200 level.
Perspective of 1-2 years looks bullish. As H&S pattern will be completed, new bullish trend should start. We expect to see gold on areas above 2000$

In very short-term perspective price action has a nature of retracement action. Coming elections will add a lot of uncertainty and situaiton could change drastically. But right now technical picture mostly stands the same. Next week we will watch for bearish reversal patterns and first one will be potential H&S.


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 edged lower on Tuesday amid stronger Asian stocks and a steady U.S. dollar, with investors awaiting cues from a series of upcoming central bank policy meetings and U.S. economic data.

Of the various central bank policy meetings due this week, the Federal Open Market Committee meeting due Tuesday and Wednesday will be closely monitored by markets for direction on the timing of an impending interest rate hike. October U.S. non-farm payrolls data is due Friday.

Spot gold had slipped 0.02 percent to $1,277.01 per ounce at 0523 GMT, while U.S. gold futures for December delivery rose $5, or 0.39 percent, to $1,278.

"One of the reasons the gold session was relatively quiet may be that the market is anticipating absorption of four monetary policy meetings this week," HSBC analyst James Steel said in a note. "The market will also have to focus on the U.S. election. This leads us to think that prices will be firm this week."

Spot gold may break resistance at $1,280 per ounce and rise more to the next resistance at $1,293, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

Markets were pricing in around a 78 percent chance the Fed will raise rates in December, but just a 6 percent chance of a hike this week, according to the CME Group's FedWatch Tool. Stronger-than-expected factory growth in China helped Asian stocks erase early losses on Tuesday, with MSCI's broadest index
of Asia-Pacific shares outside Japan up 0.3 percent.

The dollar edged higher on Tuesday as the final days of the contentious U.S. presidential campaign overshadowed other major market events, as investors weighed the latest concerns about an FBI investigation into Hillary Clinton's use of a private email server. "Certainly the FBI's probe into Clinton's emails makes things more uncertain with people locking into gold for a little while I think," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

So here we still watch for our 1290 area resistance on daily chart. As gold has re-established upward action, we probably will need to watch for some other reversal pattern rather than H&S that we've discussed in weekly research.

On daily chart picture mostly stands the same - gold stands in motion to our resistance:

Intraday chart on gold right now is very similar to EUR. First is - price has formed bullish grabbers that suggest further upside action. Right around 1290-1293 area we have multiple targets - 1.618 of intial AB-CD, AB=CD of most recent extension. Also, taking in consideration current action, gold also could form, say, butterfly "sell" that also has 1.618 extension in the same area.
Thus, our initial suggestion on 1292 level looks like was correct, and now we need just wait a bit and see what will happen when market will reach it.

 

[bobsbeer]

We have been talking about the 1290 level for some time now on here and other commentators have similar analysis. If this is the general consensus, it looks like if it is ever reached there will be a massive sell off very quickly as we all enter short positions. Interesting times ahead. Or will news related events dent this scenario. Everyone seems to agree that the Fed will increase rates in December, although if the Fed follow the FBI's trashing of convention, who know what this week will bring. lol.

 

[Sive Morten]

Good mornng,

(Reuters) Gold hit a near one-month high on Wednesday as investors grew more concerned over the global economic outlook and started looking for safe-haven assets on signs that the U.S. presidential election race was tightening.

The mounting anxiety over the elections after the renewal of the FBI probe into Democratic candidate Hillary Clinton's emails has left investors favouring gold and other safer assets over riskier ones like stocks.

"Uncertainty leading up to the U.S. election is likely to provide support to the precious complex," MKS PAMP Group trader Jason Cerisola said.

Spot gold was up 0.4 percent at $1,292.81 an ounce at 0715 GMT. Bullion touched its highest since Oct. 4 at $1294.43 per ounce. U.S. gold futures rose 0.47 percent to $1,294.00 per ounce. Earlier in the session, it touched a one-month high at $1,295.70.

Markets were also awaiting direction on a U.S. interest rate hike from a two-day U.S. Federal Reserve policy meeting. The outcome of the Federal Open Market Committee meeting was due later in the day, although a rise in rates before December was seen as unlikely.

"The FOMC this week isn't in play. What's driving all of this is that (Republican candidate) Donald Trump is closing in on Hillary Clinton at a very rapid rate post the developments in the email server saga," said Jeffrey Halley, senior market analyst at OANDA.

"For the next two weeks, it is all going to be about the U.S. elections and gold is a main beneficiary," he said. The Fed is mostly expected to keep interest rates unchanged on Wednesday though setting the stage for a hike in December.

Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, and also boost the dollar, making the metal more expensive for those holding other currencies.
Asian shares tumbled to seven-week lows on Wednesday and the dollar was on the defensive just days away from the U.S. presidential vote on Nov. 8 The dollar index, which measures the greenback
against a basket of major currencies, was down 0.03 percent at 97.673.

Spot gold may end its bounce around a resistance at $1,293 per ounce, as suggested by its wave pattern and a Fibonacci ratio analysis, according to Reuters technical analyst Wang Tao.

So, on gold market we see approximately the same action as on FX and other market. Since all markets right now have the same driving factor - Trump lead and rush around elections and scandal with Clinton emails...

On daily chart DRPO "Buy" shows it's shine. Price has exceeded 1292 level and this action puts under question short-term bearish perspective. In general, current situaiton forces us to cancel our trading plan for short entry from 1290 level by many reasons. First is thrusting action, second -moving above WPR1 and MPP, finally exceeding strong resistance area around 1290.
Thus, as we can't control driving factors and uncertainty is growing - before going short we need to get clear reversal patterns:

Meantime, next upside target stands around 1306:

Thus, no shorts on gold market as well. Trump victory could lead to serious consequences and even chaning fo medium-term trends. So, it is possible that we could change our view drastically after 8th of Novermber... But currently we just need to be careful and do not marry any position.... take closest targets...

 

[Sive Morten]

Good morning,

(Reuters) Gold rose on Thursday, shrugging off signals from the Federal Reserve that it could hike interest
rates next month, as uncertainty over the outcome of the U.S. presidential election hurt the dollar and upheld the safe-haven demand for bullion.

Spot gold rose 0.4 percent to $1,301.63 an ounce at 0731 GMT. The yellow metal touched a high of $1,307.76 in the previous session, its best since Oct. 4. U.S. gold futures were down 0.4 percent at
$1,302.40 per ounce.

"Some people think that Donald Trump would become the U.S. president and if that happens it is negative for the U.S. dollar and positive for gold," said Jiang Shu, chief analyst at Shandong Gold Group.

Narrowing polls have led markets to price in more risk that Republican Donald Trump might defeat his Democratic rival Hillary Clinton in next week's contentious U.S. presidential election, perhaps remembering the turmoil that followed the surprise Brexit vote.

"The tightening U.S. election has generated enough uncertainty to propel the market higher in our view," HSBC analyst James Steel said in a note. "If uncertainty is the factor providing the oxygen for the gold rally, then it is likely to continue at least until the election."

The dollar nursed its losses on Thursday as election concerns overshadowed this week's signals from the Fed that it was on track to hike interest rates next month as the economy gathers momentum and inflation picks up.

The dollar index, which measures the greenback against a basket of currencies, fell 0.3 percent to 97.103.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion and also boost the dollar, making the metal more expensive for those holding other currencies.

"Nonfarm payrolls data on Friday and U.S. election on Tuesday should provide plenty of volatility," said MKS PAMP Group trader Jason Cerisola. The key nonfarm payrolls report will be released on Friday.

Employers are expected to have added 175,000 jobs in October, according to the median estimate of 106 economists polled by Reuters.

"Even bad data won't change the idea of a rate hike as the Fed has shown that there is a high probability for a rate hike in December," Jiang Shu of Shandong Gold Group said.

On gold market situation very similar to FX market. Although gold has jumped slightly higher than 1292 - right to 1306, but due fast return it keeps chances to re-establish downward action. It is difficult to make any forecasts on election background that brings significant adjustments to normal technical behavior of the markets, but if gold will fail to pass through 1300-1306 area up, bearish action will continue. This is what I'm waiting for. BTW, our daily DRPO "Buy" has been completed:

On 4-hour chart market has completed our predefined target - 1.618 AB-CD extension. As upside action was really fast, we do not dare yet to call current action down as "bearish trend", let's call it as "retracement" by far. As retracement, we see it's first target around 1280 Fib support area and MPP:

If you would like to go long and beilieve that gold will move up further - you need to wait for some drop and 1280 will one area among the others where you could search for buy signals.
For others, who have bearish view on gold - watch for action around MPP. If gold will break it down, this could become first bell on possible continuation to 1200.
Meantime gold has formed perfect DRPO "Sell" that triggered short-term reversal:

 

[Sive Morten]

Good morning,

(Reuters) Gold eased on Friday as the dollar clawed back some lost ground ahead of U.S. non-farm payrolls
data later, but the metal stayed on track for its biggest weekly rise since mid September on jitters over next week's U.S. election.

Spot gold was down 0.1 percent at $1,302.36 an ounce at 1015 GMT, while U.S. gold futures for December
delivery were little changed at $1,303.40. The dollar steadied after recent losses on Friday ahead of the U.S. payrolls data at 1230 GMT, which will be closely watched for clues on the outlook for U.S. monetary policy.

The Federal Reserve signalled after a policy meeting earlier this week that it would go ahead with an expected rate hike in December, but poor economic data could throw that course into question.

"The risk in any of these numbers is that they start to reverse the positive trend of data that the Fed has been seeing, and defer that flagged hike further," Simon Weeks, head of precious metals at ScotiaMocatta, said.
Gold 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.

The metal is up 2 percent this week, hitting its highest in a month, after the Federal Bureau of Investigation said last week it was reopening a probe into Democrat candidate Hillary Clinton's use of a private email server while Secretary of State.

Friday's announcement from the FBI narrowed Clinton's lead over her Republican rival Donald Trump, polls showed, rattling financial markets which had been pricing in a Clinton victory. European shares hit their lowest in nearly four months and the dollar is heading for its worst week in twelve, despite its firmer tone on Friday.

"Gold implied volatility rallied sharply across the curve over the past week, as investors rotated to safe haven assets after polls tightened," Citi said in a note. "As the election keeps driving gold prices in the short-term, we expect gold vol to remain elevated into Election Day."

Gold prices in India swung to a discount this week as a rally in prices dampened retail demand, while buying in leading consumer China rose. Investor appetite looked firm, with the world's largest gold exchange-traded fund announcing a 4.4-tonne rise in its holdings on Thursday.

Gold shows similar situation to EUR. Both assets stand at crucial resistance level of previous consolidation. As a rule market protects former consolidations from price returning back inside of it. But if somehow price will break these levels and returns - this changes short-term sentiment and market moves to opposite border of consolidation or even higher. That's why current 1306 level is so important:

On intraday charts currently we do not see something really special by far. OUr DRPO "Sell" pattern has worked nice, but gold has reached only minor target and shows fast return up. It means that situation is not simple here. This return mostly looks like the hint of possible upside continuation.
That's why today, we think, it would be better to wait clarity with 1306 area. No matter what action will happen - up or down out from it, we will have a lot of time for taking corresponding position. That's why here we do not see any reasons with breakout anticipation.

 

[yousimon]

Yes，upside continue....as a result of failure DRPO, or the DRPO reach his target XOP., and have upside more than F5, should buy XAU

 

[yousimon]

Target, may be 1360

 

[yousimon]

Yes，upside continue....as a result of failure DRPO, or the DRPO reach his target XOP., and have upside more than F5, should buy XAU

tp1 1314, tp2 1324@F5/XOP