Gold 1 OZ (XAU=X) Capped by Increasing Demand For Riskier Assets
Gold futures finished slightly lower last week with gains probably capped by increasing demand for risky assets. serving to to underpin the precious metal was a weaker U.S. Dollar. I saw no evidence of “safe-haven” demand which is an illusion anyway. The direction of gold prices is controlled by the direction of interest rates. the rest is just fairy dust.
Last week, August Comex gold settled at $1751.70, down $1.80 or -0.10%.
I don’t care how optimistic you are over the near-term, but the facts are gold futures haven’t created a brand new high for the year since the week-ending April 17. additionally, it’s traded in a $1789.00 to $1668.40 range for five weeks.
One of the explanations why gold hasn’t stirred higher over the short-term is that international interest rates have two-dimensional and also the global governments haven’t been throwing cash into their various economies for weeks. There initial pledges of business enterprise and financial input have in all probability been priced into the market. what is more, with international equity markets clawing back quite 50% of their earlier losses, some traders are commercialism out of their gold hedge positions to shop for stocks.
The weaker U.S. dollar is providing some support. this can be as a result of gold is dollar-denominated therefore once the dollar weakens, gold becomes additional engaging to foreign consumers.
With the economy retardation convalescent from the coronavirus pandemic, the dollar has been losing its charm as a safe-haven plus. what is more, the monetary unit is strengthening and if you’re an honest Forex monger then you must apprehend that the monetary unit represent 57% of the coefficient within the dollar Index. To some, this news could return as a surprise.
Shayne Heffernan Trade Idea
- “Lower for Longer” interest rates are supportive of Heffx analysts’ positive view on gold. However, there is concern over the large divergence between record strong investor demand for gold and a record weak retail bid for gold (e.g. jewelry). Combined with reduced net buying from the official sector and a potential increase in gold recycling for the rest of 2020, We believe prices may make a slow grind higher but generally hold between US$1,600-$1,700/oz, rather than quickly spike to the US$1,850-$1,950/oz area. In turn, a global growth and EM recovery in 2021 could be what supports the next leg higher towards US$2,000/oz.
- Overall, we remain medium-term bullish. Forecasts for Q2 average gold prices are upgraded to US$1,710/oz and 2020’s average lifted from US$1,640/oz to US$1,680oz, while maintaining 2021’s average at US$1,925/oz.
Technical Indicators
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1,802.50.
The projected lower bound is: 1,685.79.
The projected closing price is: 1,744.15.
Candlesticks
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 31 white candles and 19 black candles for a net of 12 white candles.
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 Indicators
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.
Stochastic Oscillator
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 74.8368. This is not an overbought or oversold reading. The last signal was a sell 10 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 58.43. 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 buy 51 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 69. This is not a topping or bottoming area. The last signal was a sell 7 period(s) ago.
MACD
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 5 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 14.100 at 1,740.400. Volume was 8,900% above average (trending) and Bollinger Bands were 49% narrower than normal.
Open High Low Close Volume 1,736.090 1,744.190 1,731.390 1,740.400 29,716
Technical Outlook Short Term: Neutral Intermediate Term: Bearish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 1,728.66 1,690.94 1,566.50 Volatility: 14 22 20 Volume: 2,972 594 149
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.
Summary
PREC.M.XAU= is currently 11.1% above its 200-period moving average and is in an downward trend. Volatility is low 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 4 periods.
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