Gold and silver futures prices are sharply up in midday U.S. trading Tuesday. Heavy short covering in the futures market and perceived bargain buying in the cash market are featured today, following recent solid losses that pushed gold to a five-month low and silver to a nine-week low on Monday. However, the bulls have some more heavy lifting to do to begin to suggest that near-term price uptrends can be sustained and that near-term market bottoms are in place. February gold futures were last up $36.00 at $1,817.00 and March Comex silver was last up $1.427 at $24.03 an ounce.
The metals markets may be seeing some support on news the U.S. Congress is working on a big financial stimulus package for Americans. However, such efforts have proven futile the past couple months.
A solid drop in the U.S. dollar index to a 2.5-year low today is also working in favor of the metals market bulls.
Global stock markets were mixed to higher overnight. U.S. stock indexes are higher at midday. There remains little risk aversion in the marketplace on this first day of December, amid global stock market rallies that see the U.S. stock indexes at or near record highs.
One feature in the marketplace recently has been soaring Bitcoin prices, which this week hit a record high near $20,000. Some are proclaiming Bitcoin is the new safe-haven gold. When it comes to Bitcoin’s concept, some say they get it and some say they don’t get it. Only time will tell which camp is correct. Overall markets history does suggest the extreme daily price moves in Bitcoin are indicative of a market that is near a major top. As for gold, reports say the yellow metal has seen three straight weeks of gold-backed ETF outflows.
The other important outside market sees January Nymex crude oil futures prices weaker and trading around $44.75 a barrel. The OPEC oil cartel is meeting this week and will be discussing keeping its present production cuts. The yield on the benchmark 10-year U.S. Treasury note futures is currently trading at 0.85%.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 1,867.16.
The projected upper bound is: 1,878.15.
The projected lower bound is: 1,746.56.
The projected closing price is: 1,812.35.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with PREC.M.XAU=). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 33.5962. This is not an overbought or oversold reading. The last signal was a buy 0 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 40.28. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -75. This is not a topping or bottoming area. The last signal was a buy 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 37.038 at 1,814.057. Volume was 8,900% above average (trending) and Bollinger Bands were 35% wider than normal.
Open High Low Close Volume 1,776.400 1,817.200 1,774.850 1,814.057 102,062
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 1,824.77 1,880.77 1,800.41 Volatility: 20 22 25 Volume: 10,206 2,041 510
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
PREC.M.XAU= is currently 0.8% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods.
Our volume indicators reflect very strong flows of volume into XAU= (bullish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 10 periods.