GOLD PRO WEEKLY, September 28-01, 2015

[Sive Morten]

Fundamentals

Reuters reports - gold fell from one-month highs on Friday after Federal Reserve Chair Janet Yellen kept the door open to an increase in U.S. interest rates this year, sparking a dollar rally, while palladium was on track for its biggest weekly rise in almost four years.

Yellen said in a speech on Thursday that she expected the U.S. central bank to start raising rates later in 2015, as long as inflation remained stable and the U.S. economy was strong enough to boost employment.

Expectations for a rise in ultra-low rates, which have cut the opportunity cost of holding gold while weighing on the dollar, have helped push the metal down 5 percent this year.

Gold rallied after the Fed opted at its September policy meeting to keep rates on hold, hitting its highest since Aug. 25 on Thursday as dollar weakness prompted a wave of short covering. It has failed to maintain those gains, however.

Prices will likely meet resistance around the $1,150 per ounce mark, the 100-day moving average, traders said.

"The sell-off is most likely on the clarity from the Fed on a rate hike in December," Pradeep Unni at Richcomm Global Services said. "It's clear from (Yellen's) talk that the Fed paused in September only for the global markets' sake."

The speech sent the dollar to a five-week high against a basket of major currencies <.DXY>. The U.S. currency extended gains after data showed the U.S. economy expanded more than previously estimated in the second quarter.

CFTC data in general shows some increasing in speculative long positions, but this growth was not significant, open interest in general stands the same. So, currently we do not see extreme support of current rally by investors' money.
At the same time SPDR fund shows better results. Its storage has increased for 6 tonnes last week. It is not too big, but it is also not small increase. As result, we could say we would like to see more inflows but nevertheless this rally has the chances, still some support exists

Technicals
Monthly

As we've said last week - it is difficult to make any far going conclusions yet and mostly right now started upside action looks like tactical bounce from strong support area. To get another status market should show significant upside action and form bullish reversal swing.

Also changes barely have touched monthly time frame yet, currently trend is turning bullish but September month is not closed yet and it stands as inside candle. We've got very important detail here - the close of August candle. As a result, we've got bearish grabber on monthly chart that suggests moving below 1080 area. This is the answer on our questions - how far upside action could climb. To erase this bearish setup - market should erase the grabber first and form reversal swing second, i.e. move above 1300 area.

Until market keeps grabber valid, it suits logical picture very well. When market has started explosive upside action three weeks ago, I was a bit confused, since we have very important targets around 1050 and I couldn't believe that gold just turn up, it would be too unnatural and untypical for gold, or even for any market. And appearing of the grabber explains everything and works as linking tool between 1050 target and current market action.

We have just one long-term pattern in progress that has not achieved it’s target yet. This is VOB pattern. It suggests at least 0.618 AB-CD down. And this target is 1050$. Besides, in the same area we have 1.618 target of most recent butterfly pattern.

If somehow gold will drop below 1050. Next destination will be 890-900$ area - major 5/8 Fib support and Agreement !!! with AB=CD pattern down, the same one that points VOB target.

So, currently despite on solid upside rally, bearish monthly setup is still valid and current upside action is still retracement. Whether it will shift to reversal - we will see...

Weekly

As we've mentioned last time Weekly chart in fact shows tricky picture and makes overall situation a bit complex. Trend here is bullish and we have two in a row bullish grabbers. It means that theoretically we can't take short until these grabbers will fail and trend will shift bearish.
The trick stands around grabbers. The point is they assume taking out of 1180 top, i.e. erasing of monthly pattern. So, we have two opposite patterns in different time frames. Some of them should fail probably. Taking in consideration COT numbers - situation should change on weekly chart.
At the same time we have pattern of another sort. This is upward AB-CD with 1193 target.

Last week we've talked on minor 0.618 target of this pattern at 1155. This target has been reached and now market stands in reasonable pause. And gradually we're approaching to major question - what direction market will choose, what grabbers will fail weekly or monthly. And currently, guys, we do not clear answer. COT data and SPDR shows more or less but support to current rally, which means that it could continue further.

All that we could do right now is just a narrow the task - let's say that if market will move above 1155-1165, then we probably will see 1193-1200 area and monthly grabber will be erased. If market will not be able to do it and will start dropping, especially below 1100 area, this will be clear signal of bearish reversal and road to 1050 target.

Daily

Daily context mostly is bullish. We have upside trend and upside action. Right now market has met solid resistance - K-area, minor AB-CD target (which creates an Agreement resistance) and daily overbought. Whether market will pass through it? We'll see. But first gold could show some bounce, since we have bearish Stretch pattern.
If market still will continue move up, then next destination will stand somewhere around 1190 - AB-CD target and this also could be 1.27 Butterfly "sell". In general 1160 area will be really big challenge for Gold, since it's really very strong resistance.

4-hour

Here market stands with upside AB-CD pattern, it has not quite completed it. It is very probable that before deep retracement down market will try to complete this pattern and reach WPR1.
Downward retracement that we're waiting for probably will be deep and most probable levels that could be reached are - K-support+WPP (they will drift slightly higher if market will complete AB-CD) and second one is WPS1+5/8 Fib support.
That's being said, in the beginning of the week we will watch for completion of AB-CD. Next step should be downward retracement. Still we retracement could start right now (because daily AB-CD target has been hit). But this is not really big deal for us. Our major object to watch is support levels where we could take long position:

Conclusion:
To make final judgement on long-term perspective we need to see breakout of major levels, because gold has formed opposite patterns on monthly and weekly time frames and currently it is very difficult to say definitely which one will prevail.
Meantime daily context is bullish, but market stands at resistance. On coming week we will wait for retracement down first and think about taking long position second

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 reports today - Platinum fell below $900 an ounce on Tuesday for the first time since January 2009 on fears that the Volkswagen emissions scandal would reduce demand from the auto sector.

Spot platinum slid to $899.80 an ounce, before paring some losses to trade at $902.99 by 0651 GMT.

The metal, which has fallen for seven sessions out of eight, has been hurt by news of Volkswagen AG's falsification of U.S. vehicle emission tests as investors believe it could affect demand for diesel cars.

Platinum is widely used as a component in emissions-cleaning catalytic converters for diesel cars.

"We tend to think that platinum prices have been oversold in the face of the emissions concerns and worries about diesel vehicle sales going forward," said HSBC analyst James Steel.

"It strikes us that not enough attention is being given to the likelihood that tighter emissions legislation and increased vigilance by the auto makers will increase platinum demand," he said.

Upcoming European legislation on CO2 emissions will make it harder for the authorities to back a war on diesel, analysts have said.

Meanwhile, palladium has gained as investors believe demand for gasoline cars could increase in the wake of the Volkswagen scandal. Last week, the metal hit its highest since mid-July.

A flurry of planned appearances this week by Federal Reserve officials began on Monday, but conflicting views by policymakers only created more uncertainty.

William Dudley, head of the New York Fed, and John Williams, head of the San Francisco Fed, both signalled support for a rate hike this year. But Charles Evans, head of the Chicago Fed called for rates to stay near zero until mid-2016

Traders will also be keeping an eye on U.S. data, including non-farm payrolls due on Friday.

Non-interest-paying gold has lost about 4 percent this year on fears that demand could take a hit in a higher interest rate environment.

The drop in precious metals also comes amid a sell-off in the broader commodities market.

Shares in commodity trading firms were hit hard and a Japanese shipper filed for bankruptcy on Tuesday, in the latest signs that tumbling energy and raw material prices are triggering a sector-wide crisis.

So nothing really new in today's comments, while technically market is approaching to "dangerous" point of no-return. In weekly research we've said, that it's nothing curious in current retracement down - it's absolutely normal and reasonable, since market has hit 0.618 AB-CD target right and Fib resistance and daily overbought. And some retracement is neccesary anyway. But right now retracement looks deep and almost stands on the edge when it could turn status and become reversal. Take a look market now is moving below MPP:

On 4-hour chart we've discussed two possible scenarios. First one was suggested possible upside continuation first and retracement second, but market has shown the second one - immediate retracement down. That's fine. Our next step is - looking for support levels K-area (not shown, already broken) and major 5/8 support around WPS1 and MPP. Now market is approaching to it. At the same time gold is challenging WPS1. If it will break it, it will mean that current move is not probably just retracment. Fib support stands slightly below "C" point of AB-CD and if gold will drop to it - it will erase current AB-CD. In this case we could get shifting of market shape to bearish butterfly and breaking of short-term bullish scenario.
IT seems that this will happen, since we see nasty black candles and acceleration down. So, our call is - don't be long today..

 

[Sive Morten]

Good morning,

Reuters reports Platinum edged up on some bargain hunting on Wednesday but was still near its lowest since December 2008 and looked set to post its biggest quarterly slump in seven years on fears of a demand fallout from the Volkswagen emissions scandal.

Gold extended losses to a fourth day and was headed for its worst quarter in a year on a looming U.S. rate hike.

Platinum has been hit after revelations that Volkswagen AG falsified U.S. vehicle emission tests, which some believe could affect demand for diesel cars. Platinum is widely used in auto catalysts, particularly for diesel engines.

The metal's 15 percent loss this quarter is its fifth straight quarterly drop and its worst three-month period since the third quarter of 2008. It is down 9 percent for the month, its biggest monthly drop since May 2012.

Spot platinum edged up 0.4 percent to $916.95 an ounce by 0641 GMT, not too far from a 6-1/2-year low of $894 reached in the previous session.

"There is some bargain hunting for platinum but it is not very sustained," said a trader in Tokyo, adding that investment demand for platinum has seen a pick up in recent days with the price slump.

"Sentiment is very bearish and I think we could break below $900 again."

Even before the Volkswagen scandal broke last week, the platinum market had been suffering from an increase in supplies following the end of last year's five-month strike among platinum miners in major producer South Africa, and a weakness in Chinese jewellery demand.

Palladium , on the other hand, has gained as investors believe demand for gasoline cars could increase. With a 10 percent jump, the metal was poised to log its best month since July 2013, though it was still headed for a quarterly loss.

Spot gold fell 0.2 percent to $1,124.81.

With a drop of 4 percent, the yellow metal was headed for its worst quarter in a year, hurt by expectations that the Federal Reserve would raise U.S. rates this year for the first time in nearly a decade and reduce demand for non-interest-paying bullion.

Traders will be eyeing a speech by Fed Chair Janet Yellen later on Wednesday and a private employment report for clues about the economy and timing of a rate hike.

The metal failed to see safe-haven bids despite a drop Asian stocks to three-year lows on Tuesday and concerns over the Chinese economy.

Gold could see more losses this week as top consumer China heads for a week-long holiday from Thursday, removing a key support for prices during Asian trading hours.

Currently we do not see big action on gold, but anything could change closer to the end of the week. Right now market is trying to shift trend bearish but overall action still stands heavy. Retracement looks a bit deep for minor 0.618 AB-CD target. Trend shifting to bearish could change overall daily context:

On 4-hour chart market still coiling around our support area - WPS1 and major 5/8 Fib level. Also we see shy hint on possible upside action that could become a right shoulder of our H&S pattern. This hint is MACD hidden divergence.

Upside action is not surprising if you will take a look at hourly chart. Gold has completed 1.618 AB-CD retracement right around 4-hour support. So upside action seems logical from any point of view - as AB-CD as H&S pattern:

 

[Sive Morten]

Good morning,

Reuters reports Gold extended losses to a fifth session on Thursday, falling to a fresh two-week low, as strong U.S. private-sector jobs data bolstered views the Federal Reserve will hike rates this year.

While traders are waiting for U.S. nonfarm payrolls data on Friday before placing big bets, the absence of top consumer China, where markets are shut for a one-week holiday from Thursday, is also hurting prices.

U.S. private employers added a stronger-than-expected 200,000 jobs in September, payrolls processor ADP said on Wednesday. Though other data showed factory activity in the U.S. Midwest contracted, investors cheered the jobs data, sending the dollar up on hopes of a rate hike this year.

"Gold prices came under pressure with upbeat U.S. economic data," said ANZ analysts. "ADP data shows U.S. (nonfarm) payrolls in September could beat forecast estimates."

Robust nonfarm payrolls could spark another sell-off in gold, as the data could prompt the Fed to raise rates soon.

The U.S. central bank has said the timing of a rate hike is data dependent. Gold has come under pressure from expectations the Fed is set to hike rates this year, potentially lifting the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.48 percent to 687.42 tonnes on Wednesday, but the gain failed to support prices.

Charts were not looking good for gold either.

The metal may break support at $1,112 and fall towards the next support level at $1,099, said Reuters technicals analyst Wang Tao.

Among other precious metals, platinum fell 0.2 percent to $902.25. It had fallen to $894, its lowest since late 2008, earlier this week on fears that revelations of Volkswagen's falsification of U.S. vehicle emission tests could affect demand for diesel cars.

Platinum is widely used in emissions-controlling automotive catalytic converters, particularly for diesel engines.

Elsewhere, the global silver-coin market is in the grips of an unprecedented supply squeeze, forcing some mints to ration sales and step up overtime while sending U.S. buyers racing abroad to fulfil a sudden surge in demand.

So, gold market looks heavy, daily trend has turned bearish and market really could turn to big bearish butterfly with 1050 destination point. But hourly chart shows that 1100 area will be important support, because of lows and daily oversold. This level is also important because this is "C" point of upside AB-CD. If market will take it out - it will erase AB-CD up...

On 4-hour chart we see even more radical action than we've supposed yesterday. We didn't get any H&S, but just bearish breakout instead. Market has dropped below WPS1 that hints on appearing of new bear trend and increases chances on breakout thorugh 1100. Also gold has dropped below major 5/8 Fib support level.
So, it seems that currently it is early to speak on possible retracement. Probably the only level where it could start from is 1100 support. As soon as it will happen, we will return back to discussion on this subject:

 

[Sive Morten]

Good morning

Reuters reports today Gold fell to a two-week low on Friday, extending losses into a sixth straight session as investors positioned themselves ahead of U.S. jobs data that could help gauge when the Federal Reserve will raise interest rates.

Economists polled by Reuters expect Friday's nonfarm payrolls report to show U.S. employers hired 203,000 workers in September, improving from August's 173,000 increase.

A strong report would support views that the economy was recovering strongly enough for the Fed to raise rates this year, which in turn could hurt non-interest-paying gold.

"Our call for gold prices to touch $1,050 at year-end is still very much intact on the grounds for a Fed fund rate hike before the year is up," said OCBC analyst Barnabas Gan.

The Fed will hike rates by 25 basis point hike this year on the back of a recovery in the economy, he said.

The U.S. central bank has said the timing of a rate hike would be data dependent. Higher rates could dent demand for non-interest-paying gold, while boosting the dollar.

Wednesday's robust ADP data on U.S. private-sector jobs, bolstered expectations that the nonfarm payrolls report would also be strong.

Other data on Thursday showing a slowdown in manufacturing activity failed to provide any relief for gold, as traders were reluctant to place big bets ahead of the jobs report.

Among other precious metals, platinum slumped to $891 an ounce on Friday, its lowest since December 2008. It is down 5 percent for the week, its biggest weekly drop in year.

Platinum has been hit after revelations that Volkswagen falsified U.S. vehicle emission tests, which some believe could affect demand for diesel cars. Platinum is widely used in auto catalysts, particularly for diesel engines.

Meanwhile, palladium was trading near a three-month high of $679.50 reached in the prior session. It was headed for its fourth straight weekly gain, its longest such winning streak since June-July 2014.

The metal, chiefly used in catalysts for gasoline engines, was boosted by data showing strong car sales from major automakers. It has also benefited from views that demand for gasoline cars would increase after Volkswagen's scandal.

On Gold market we do not see big shifts by far. Payrolls probably will lead market to 1100 area, but it is a question how easy gold pass through it. This is daily oversold and if NFP will not be super-positive, then probably gold will take some pause there. Anyway, we mostly wailt for tactical bounce to sell into:

On 4-hour chart we have poor beacons. Probably only this steep AB=CD that still points at the same 1100 area and agrees with daily oversold. If bounce really will start then our level to watch is 1120 K-resistance and former lows. This will be also new October PP.