Can a rush into Gold 1 OZ (XAU=X) be a precursor to more negative-yielding debt worldwide?
Can a rush into gold be a precursor to more negative-yielding debt worldwide? Wells Fargo asks this question in the latest note to clients as the bank views gold as overvalued at above the $1,400 an ounce level.
Gold bulls were back in the driver’s seat on Wednesday as prices were trading above $1,420 an ounce. The August Comex gold futures were last at $1,422.10, up 0.08% on the day.
Gold has seen support come from markets’ anticipation of looser global monetary policies, renewed safe-haven demand, and fresh chart-based buying, according to Kitco’s PM Roundup.
A sudden surge in gold, which is viewed as a hedge against risk and inflation, could mean that investors are worried about the build-up of negative-yielding debt, said Wells Fargo head of Real Asset Strategy John LaForge.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 1,350.76.
The projected upper bound is: 1,448.50.
The projected lower bound is: 1,387.41.
The projected closing price is: 1,417.95.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
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 70.8003. This is not an overbought or oversold reading. The last signal was a sell 5 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 68.60. This is not a topping or bottoming area. However, the RSI just crossed below 70 from a topping formation. This is a bearish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 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 61. This is not a topping or bottoming area. The last signal was a sell 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 sell 0 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -3.350 at 1,415.190. Volume was 8,900% above average (trending) and Bollinger Bands were 133% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,410.34 1,324.74 1,280.97
Volatility: 22 14 12
Volume: 1,843 369 92
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 10.5% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect very strong flows of volume out of XAU= (bearish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 37 periods.