Gold 1 OZ (XAU=X) could face additional selling pressure if employment data sours sentiment
Gold prices could suffer after the minutes from the Federal Reserve’s emergency meeting on March 15 are released. That day, Chairman Jerome Powell announced that the central bank cut itstarget range for its benchmark Fed Funds interest rate to 0.00-0.25 percent. He also announced a $700 billion quantitative easing program (QE) with $200 billion dedicated to mortgage-backed securities and $500 allocated to Treasuries.
While the Fed’s intention was to help bolster confidence and provide liquidity, their actions were met in turn with risk aversion. This may be because the Fed’s policies were read by investors as an acknowledgement of how dire the circumstances were that it would require credit-easing policies of that magnitude. Following the announcement, gold prices fell as demand for liquidity surged and pushed the haven-linked US Dollar higher.
This is because gold’s appeal as an anti-fiat hedge was undermined after the Fed cut interest rates to zero and led investors to question the utility of holding a comparatively illiquid asset. Gold prices may therefore suffer after the FOMC meeting minutes are released if the underlying text sends a chilling effect across markets and recreates a similar market dynamic investors saw on March 15.
GOLD PRICE DECLINE MAY BE BUFFERED BY SUPPLY SHOCK
Virus-induced supply disruptions may be able to mitigate XAU/USD’s losses. On March 25, South Africa, home to the Rand Refinery – the world’s largest metals processing outfit – announced a 21-day lockdown. While this particular facility has been exempted from a complete shutdown, bullion production will be “significantly scaled down”. An extended duration of the government’s shelter-in-place orders could push gold prices higher.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1,692.22.
The projected lower bound is: 1,542.52.
The projected closing price is: 1,617.37.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 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 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 59.2197. This is not an overbought or oversold reading. The last signal was a sell 3 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 54.57. 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 10 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 64. This is not a topping or bottoming area. The last signal was a buy 10 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 7 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 4.040 at 1,616.450. Volume was -0% below average (neutral) and Bollinger Bands were 124% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,603.53 1,592.04 1,513.65
Volatility: 36 30 20
Volume: 0 0 0
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 6.8% 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 14 periods.
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