Gold 1 OZ (XAU=X) prices seen supported by trade tensions, Brexit
GOLD PRICES are expected to remain at about $1,450 per ounce (oz) in the next three to six months into 2020, supported by the precious metal’s safe-haven value in the face of the US-China trade war, Brexit, and unrest in various parts of the world, including major gold market Hong Kong, Fitch Solutions Macro Research said in its Commodity Price Forecast.
“We maintain our gold price forecast of $1,450 per ounce (oz) for 2020, and expect prices to average around current spot levels next year. We are also neutral towards gold prices in the next three to six months, from both technical as well as fundamental perspectives,” Fitch Solutions said in the report published Nov. 29. The price projection is 5% higher year-on-year.
Fitch Solutions said central banks are expected to slow down in reducing interest rates, making gold more attractive “due to the fact that growth could be starting to stabilize.” The firm expects the Federal Reserve to hold off on rate cuts throughout 2020, after effecting 75 basis points worth of cuts in 2019.
In the long term, Fitch Solutions expects a mild appreciation to $1,525 by 2023, backed by cyclical pressures and imbalances, greater demand for gold by central banks, and political uncertainty across countries.
“Going forward, we expect trade developments and monetary policy to continue to be the main drivers of risk sentiment,” Fitch Solutions said.
With an improved trade environment between the US and China and tame inflation, gold could become less attractive. but if these do not take place, Fitch Solutions expects a stronger shift to gold.
“If we see a full yield curve inversion and a US equity market crash, this would naturally lead to a sharp rise in gold prices. Finally, we would change our long-term outlook of mild appreciation in gold prices if there is a technical break below $1,350 per oz in the coming years,” it added.
Chamber of Mines of the Philippines (CoMP) Executive Director Ronald S. Recidoro said the organization has a similar scenario for gold prices in the coming years, noting support from trade tensions between the US and China, as well as scarcity factors.
“We concur with that assessment. I think there is consensus that the gold price is general on the rise, owing to… US and China,” Mr. Recidoro said when asked for comment.
“Apart from that is scarcity because there has been a global slowdown in exploration, and so supply is becoming limited and the easily-mined deposits have been discovered and extracted, so it’s getting harder and harder to mine. We think in the long term gold will become more attractive as an asset,” he added.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1,490.76.
The projected lower bound is: 1,431.11.
The projected closing price is: 1,460.94.
A black body occurred (because prices closed lower than they opened).
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 23 white candles and 27 black candles for a net of 4 black candles.
A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
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 77.0941. This is not an overbought or oversold reading. The last signal was a sell 8 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 44.01. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 69 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 -16. This is not a topping or bottoming area. The last signal was a buy 5 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 buy 2 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -0.285 at 1,462.325. Volume was 8,900% above average (trending) and Bollinger Bands were 56% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,461.46 1,483.02 1,402.45
Volatility: 6 13 14
Volume: 28 6 1
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 4.3% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 18 periods.