GOLD PRO Weekly, September 04-08, 2017

[Sive Morten]

Fundamentals

(Reuters) - Gold rose to the highest in nearly 10 months on Friday after U.S. job growth slowed more
than expected in August, but pared gains when investors judged that the figures were unlikely to change the outlook for U.S. interest rate rises.

Spot palladium prices made their biggest one-day surge since March 2016 and reached the highest price in 16-1/2 years after some U.S. automakers reported better-than-expected August sales and as demand was expected from Houston to replace flood-damaged vehicles after Hurricane Harvey.

Spot gold was up 0.2 percent at $1,324.46 an ounce by 1:59 p.m. EDT (1759 GMT) after reaching $1,328.80, the highest since Nov. 9. It was set for a weekly gain of 2.6 percent. U.S. gold futures settled up 0.6 percent at $1,330.40. On Monday, the U.S. metals futures markets will shut early for the U.S. Labor Day holiday.

Data showed U.S. job growth slowed more than expected, but the pace of gains should be more than enough for the Federal Reserve to announce a plan to start trimming a massive bond portfolio accumulated.
The dollar index and bond yields initially weakened sharply following the jobs data but turned higher.


"Investors have been looking for a hedge against many ... risks," said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. "Pick your poison: trade, geopolitics, thermonuclear, debt
ceiling."

Gold is still likely to rise further after prices increased by 4.1 percent in August, the biggest monthly gain since January, said Mitsubishi analyst Jonathan Butler. "The technical uptrend is well established, there is
continuing uncertainty over North Korea's nuclear ambitions and an imminent wrangle between Congress and the White House over the debt ceiling that must be solved by late September to avoid technical default," he said.

Adding to geopolitical concerns, the United States on Thursday told Russia to close a consulate, worsening a diplomatic spat.

COT Report
There is no doubts that sentiment analysis shows bullish picture on gold market. Recent 4 weeks as open interest as net speculative long position increases. At the same time gold has some free room till saturation around 300K contracts.
SPDR Fund statistics also shows increasing of gold in storage. Fundamental events and geopolitics also stands in favor of gold market. Thus, we do not have some visible barriers and limitation from this factors to gold.

Technical
Monthly

As market has shown strong close on August, we probably could put aside our bearish scenario for awhile. If gold will start to show strong bearish action again, we will return back to it. But right now upside scenario has more chances to happen.

On July and August we have tail close. Right now market has reached solid resistance area around 1330. It already has been tested once, but it is still valid. This is not just 3/8 major monthly Fib level. This is also Yearly Pivot Resistance 1 and 0.618 AB-CD target. So, may be some pause will happen here.

Next major target will stand around 50% Fib level and Agreement, as it coincides with AB=CD objective point as well. Market could take the shape of butterfly to get there. 1.27 extension also stands in the same area:

Weekly

So, market finally has broken through 1295 area that it was challenging since the beginning of the year. Trend stands bullish on weekly chart and price is not at overbought by far. In fact, guys, gold market doesn't have any significant resistance till the next 1380 target, which is strong monthly level.

Here we have two AB-CD patterns of different scale. First one is large AB-CD that we've mentioned above and this is 0.618 target that has been hit last week. Usually reactions on 0.618 extension is mild, especially if price shows strength as we have on last week. Theoretically gold could re-test 1285-1290 broken area, but it is not the fact that this will happen. Because very often 0.618 targets remain disrespected. Thus, if any bounce will happen here - we probably should treat it as chance to go long, at least as it is suggested by current technical and sentiment picture.

Daily

On daily chart we do not have yet any signs of retracement. Trend stands bullish, price is near overbought but not quite at OB. On a way of this rally market shows pretty accurate retracement. They have a bit different slope but depth mostly stands the same.

Taking in consideration strength of monthly/weekly resistance and this harmonic swing, it seems that retracement back to 1300 and Monthly Pivot looks very probable here. At least we should keep an eye on possible bearish intraday patterns, because right now it is still unclear whether gold will show any respect to 1330 resistance or not. Logically, it should, but, who knows what Mr. Un will invent...:

Intraday

Here, guys, I see just this pattern, that, at least theoretically is suitable to idea of possible retracement:

It could work because North Korea conducted its sixth and most powerful nuclear test on Sunday, which it said was an advanced hydrogen bomb for a long-range missile, marking a dramatic escalation of the regime’s stand-off with the United States and its allies. President Trump and his national security team to meet today on North Korea nuclear test. Although we hear this day by day, but this is good reason to push gold market slightly higher on Monday. Besides, market will be thin as it will be Labor day in US... We will see...

Conclusion

Long term perspective of gold market becomes more bullish week by week. Although crucial price levels have not been broken yet, but overall performance looks good.
In shorter term perspective gold could show minor tactical retracement due existence of monthly resistance area around 1325-1330. But we should treat this potential action as retracement only and not expect global bearish reversal here.

It is not the fact yet that retracement will happen at all. Yes, technical picture suggests it, but recent geopolitical events could lead to straight upside continuation. So, if we will get any bearish patterns on intraday charts - 1300 level might be reached. There we probably should be ready for re-establishing of upside action.


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 up on Tuesday, hovering around their highest levels in nearly a year, as North Korea's most powerful nuclear test to date underpinned haven demand for the precious metal.

Spot gold was up 0.1 percent at $1,335.36 per ounce as of 0700 GMT after touching its strongest since late September in the previous session. U.S. gold futures for December delivery were up 0.8 percent at $1,340.80.

"Safe-haven buying's been fairly strong over the past few days but there's still a level of uncertainty about what the North Korean crisis will mean for markets," ANZ analyst Daniel Hynes said.

Stock markets were under pressure on Tuesday following a global selloff the previous day in the wake of North Korea's nuclear test, while the dollar slipped against the yen and Swiss franc amid signs the North could conduct more missile tests. North Korea has been observed moving what appeared to be an
intercontinental ballistic missile (ICBM) towards its west coast, South Korea's Asia Business Daily reported on Tuesday, citing an unidentified intelligence source. The United States accused North Korea's trading partners on Monday of aiding its nuclear ambitions and the White House declared that "all options to address the North Korean threat are on the table."

"Gold prices continued to point north this morning, suggesting that risk appetite remains underwater," OCBC analyst Barnabas Gan said. "Concerns over geopolitical tensions will likely dominate sentiments for the week ahead."

Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold still targets $1,345 per ounce, as it has cleared a resistance at $1,333, Reuters technical analyst Wang Tao said

So, as you know from our weekly research, on gold market we're mostly waited for reaction on 1325-1330 resistance area which includes YPR1 and AB-CD weekly target. At the same time our suggestion on gap up open on Monday also was correct as Mr. Un just does want to relax a bit and invented new bomb. That's why we do not abandon yet an idea of possible retracement, but now we have to look for a bit higher levels - 1342-1345. This is MPR1, daily oversold and intraday target:

Here we have the only pattern by far that could (at least theoretically) trigger retracement down. Here we have two special features. First is - now price uses 1.27 extension of butterfly as support. This is clear sign that price should go higher. It leads us to 1.618 extension @ 1342 area. Second - price action reminds bullish dynamic pressure as trend has turned bearish but price action is not. This also tells about at least minor upside continuation.
That's being said, we continue to keep an eye on this butterfly, but now switch our attention to 1.618 target instead of 1.27:

 

[Sive Morten]

Good morning,

(Reuters) - Gold prices edged up on Tuesday, hovering around their highest levels in nearly a year, as North Korea's most powerful nuclear test to date underpinned haven demand for the precious metal.

Spot gold was up 0.1 percent at $1,335.36 per ounce as of 0700 GMT after touching its strongest since late September in the previous session. U.S. gold futures for December delivery were up 0.8 percent at $1,340.80.

"Safe-haven buying's been fairly strong over the past few days but there's still a level of uncertainty about what the North Korean crisis will mean for markets," ANZ analyst Daniel Hynes said.

Stock markets were under pressure on Tuesday following a global selloff the previous day in the wake of North Korea's nuclear test, while the dollar slipped against the yen and Swiss franc amid signs the North could conduct more missile tests. North Korea has been observed moving what appeared to be an
intercontinental ballistic missile (ICBM) towards its west coast, South Korea's Asia Business Daily reported on Tuesday, citing an unidentified intelligence source. The United States accused North Korea's trading partners on Monday of aiding its nuclear ambitions and the White House declared that "all options to address the North Korean threat are on the table."

"Gold prices continued to point north this morning, suggesting that risk appetite remains underwater," OCBC analyst Barnabas Gan said. "Concerns over geopolitical tensions will likely dominate sentiments for the week ahead."

Gold is used as an alternative investment during times of political and financial uncertainty. Spot gold still targets $1,345 per ounce, as it has cleared a resistance at $1,333, Reuters technical analyst Wang Tao said.

Gold, as you can see, has completed our suggestion and indeed has reached 1345 area. Our intraday Butterfly "sell" pattern is completed now. Currently guys, gold stands at the moment where last chance exists to start retracement. Retracement has reasons here - MPR1, YPR1, AB-CD weekly target. So, usually, in such circumstances, price shows at least minor respect. But... as we understand here, gold now is driven by geopolitical factors. It it depends on what Mr. Un will say or what he will blast next time. That's why by taking position based on technical background you will take gambling on geopolitical issues despite whether you want it or not...
View attachment 33700

Technically, as I said, we have reasons to go short against most recent top as all necessary technical preparation has been done - targets are hit, Pivot are reached, pattern is formed...
If gold will break 1347 area, it means that it goes to next 1377-1380 target...
Today Mr. Putin meets president of S. Korea and today, some statement should be released. It could bring some relief later in the session...who knows...
If you still will take shorts today - do not use too extended targets, It is better to focus on 1325 or, as max, 1308 daily Fib support...Gold is bullish seasonally as well right now. So, retracement probably will be mild.
View attachment 33701

 

[Sive Morten]

Good morning,

(Reuters) - Gold held steady on Thursday, supported by a weaker dollar and lingering concerns over North Korea, as markets awaited the outcome of a European Central Bank (ECB) policy meeting later in the day.

Spot gold was unchanged at $1,333.90 per ounce at 0624 GMT, after easing 0.3 percent in the previous session. U.S. gold futures for December delivery were also flat at $1,339.10.

"The major event for today is the ECB meeting for traders, and if the ECB delivers any unexpected message during the conference that will spook the market and the gold price could benefit," said Naeem Aslam, chief market analyst, Think Markets.

The dollar was subdued on Thursday and the euro stood firm ahead of the outcome of the ECB gathering, where President Mario Draghi is expected to start laying the groundwork to withdraw monetary stimulus.

"The odds of geopolitical tensions escalating further are very high. If North Korea does another missile test, it will trigger risk-off trade and the yellow metal could benefit," Aslam added.

President Donald Trump on Wednesday warned that the U.S. would no longer tolerate North Korea's actions but said the use of military force against Pyongyang will not be his "first choice".

South Korean protesters clashed with thousands of police over the deployment of a defence system aimed at countering potential North Korean missile attacks, while China and the United States discussed options to rein in Pyongyang.

"The market is likely to continue focusing on geopolitical tensions, but it will start to shift focus to the Federal
Reserve meeting in September, looking for details on reducing the balance sheet," said Samson Li, an analyst with Thomson Reuters-owned metals consultancy GFMS.

The two-day Federal Open Market Committee meeting (FOMC) is due to begin on Sept. 19 and the U.S. central bank is widely expected to leave rates unchanged.

"I expect some downward pressure on gold starting next week and a rebound in the dollar short-term" Li said. Higher interest rates tend to boost the dollar and push up bond yields, putting pressure on gold prices by increasing the opportunity cost of holding non-yielding bullion.

Spot gold may drop into a range of $1,320-$1,325 per ounce as it has failed to break resistance at $1,345, Reuters technical analyst Wang Tao said.

So, gold shows very flat action this week. Actually - no action at all. After gap opened on Monday, price stands in very tight range. Yesterday's session also was inside one. As we've said in previous video, gold now has last chance to show bounce to 1300-1308 area as it stands at the edge of resistance area. Moving above 1347 level will mean that upside action continues and next destination point is 1380:

And we were mostly interested how market will response on intraday butterfly. Now we see that response is quite anemic by far. That's why currently hardly we could count on something deeper than 1325 area. In fact, we have some shape of H&S, but it is too flat and price action is too slow:

It means that minor reaction could follow, may be due Draghi speech. But overall gold behavior looks strong as it mostly shows no response to strong monthly/weekly resistance area...

 

[Sive Morten]

Good morning,

(Reuters) - Gold hit its highest in a year on Friday as the dollar sagged after weaker-than-expected U.S. jobs data and as festering tensions over North Korea stoked safe-haven demand.

Spot gold was up 0.3 percent at $1,353.12 at 0420 GMT, after earlier marking its strongest level since August last year. It was up 2 percent for the week, on track for a third weekly gain. U.S. gold futures for December delivery were up 0.6 percent at $1,358.

"Lingering North Korean tensions and a general U.S. dollar, sell-off propelled gold to new 2017-highs overnight. Gold continues breathing thin air at these rarified levels with the next technical target at $1,375.00," said Jeffrey Halley, a senior market analyst at OANDA.

The dollar index was down 0.5 percent at 91.204 against a basket of six major currencies on Friday, after
earlier touching its lowest since January 2015. The greenback was under pressure as long-dated Treasury
yields fell to 10-month lows, with U.S. jobless claims data and worries about the impact of hurricanes Irma and Harvey on the world's largest economy prompting demand for government debt.

"Looking at the hurricanes, the damage is expected to be huge and because of that safe-haven flows into gold, the Japanese yen and Treasuries have been seen of late," said OCBC analyst Barnabas Gan. "The very strong yellow metal price is due to safe-haven flows. Some of the gold-strength is very much due to the ongoing North Korean tensions as well. The risk for intensified conflicts is there," Gan said.

U.S. President Donald Trump said on Thursday he would prefer not to use military action against North Korea to counter its nuclear and missile threat but that if he did it would be a "very sad day" for the Pyongyang leadership.

"Gold prices rallied as weaker-than-expected economic data provided some doubt as to the next rate hike by the Federal Reserve," ANZ analyst Daniel Hynes wrote in a note. The U.S. Federal Reserve should continue gradually raising U.S. interest rates given low inflation should rebound, New York Fed President William Dudley said.

Higher interest rates tend to boost the dollar and push up bond yields, putting pressure on gold by increasing the opportunity cost of holding non-yielding bullion.

Spot gold may break resistance at $1,350 per ounce and rise more to the next resistance level at $1,358, said Reuters technical analyst Wang Tao.

So, our suspicions on gold market that it shows unreasonable strong action around weekly resistance has been supported by recent upside action. As we've said previously if market will break 1345 area, it will step on a road to next 1377-1380 target. Now it stands above MPR1 and YPR1. It's far distance already from weekly 1325 target as well. Thus, now we probably could talk about breakout and upside continuation:

At the same time it is possible minor retracement within 1-3 sessions, just to re-test broken 1345 area, before upside action will continue: