Gold 1 OZ (XAU=X) buying support from a more dovish U.S. Federal Reserve
Technically, the gold bulls have the firm overall near-term technical advantage and have gained power this week. Prices are in a 2.5-month-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in February futures above solid resistance at $1,330.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at $1,300.00. First resistance is seen at this week’s high of $1,323.40 and then at $1,330.00. First support is seen at the overnight low of $1,316.70 and then at $1,310.00.
Traders and investors are still digesting the Federal Reserve’s Open Market Committee (FOMC) meeting that concluded Wednesday afternoon. The FOMC statement contained no monetary policy changes but the FOMC members said they will now be patient on future Fed rate hikes due to muted inflationary pressures and some concerns about global economic growth. The statement also suggested the Fed will not be in such a hurry to further reduce its balance sheet of U.S. securities. Fed Chairman Jerome Powell said at his press conference that “the case for raising U.S. interest rates has weakened somewhat.” While no change in monetary policy was expected, the FOMC statement was deemed fully dovish on U.S. monetary policy. The U.S. stock market rallied sharply, the U.S. dollar index sold off and gold prices also shot higher.
In overnight news, the Euro zone got some more downbeat economic data, as its GDP growth for 2018 was reported at 1.8% versus 2.4% in 2017. However, GDP growth in the fourth quarter was up a bit from that of the third quarter.
The outside markets today see the U.S. dollar index trading near steady following Wednesday’s selling pressure. Meantime, Nymex crude oil prices are slightly lower and trading around $54.00 a barrel.
U.S. economic reports due for release Thursday includes the weekly jobless claims report, the Challenger job-cuts report, the employment cost index, the ISM-Chicago business survey, and new residential sales.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
The projected upper bound is: 1,341.90.
The projected lower bound is: 1,303.53.
The projected closing price is: 1,322.72.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 92.6972. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 19 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 73.66. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 15 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 174.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 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 up 1.310 at 1,320.820. Volume was 8,900% above average (trending) and Bollinger Bands were 11% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,296.66 1,266.06 1,245.54
Volatility: 12 10 11
Volume: 1,703 341 85
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 6.0% 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 into XAU= (bullish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 39 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.