Gold 1 OZ (XAU=X) demand in China continued to be in the doldrums
Gold prices fell to a more than one-week low on Monday as the dollar firmed and as investors remained optimistic that the U.S. economy might reopen soon from lockdowns that were enforced to contain the novel coronavirus’ spread.
Shayne Heffernan Trade Idea
The impact will be deflationary, which has historically worked against the price of gold. Risk aversion is also likely to return if economic shutdowns continue/resume. The sudden halt to business means severe disruption of dollar cash flows.
“That will drive another round of dollar funding stress, driving the US Dollar Index higher. Historically, that has tended to work against the price of gold. Eventually, when central banks attempt aggressively to inflate away the debts accumulated by their shareholders (i.e. governments), gold will shine again, in my view. But not while deflation and dollar funding stress remain a dominant concern.” Shayne Heffernan PhD in Economics
Why This Matters
The dollar strengthened 0.1% against key rivals, making gold costlier for investors holding other currencies.
Caution grips Asian share markets on expectations of a busy week of corporate earnings reports and economic data will drive home the damage done by the global virus lockdown.
Governors in U.S. states hardest hit by COVID-19 sparred with President Donald Trump over his claims they have enough tests and should quickly reopen their economies as more protests are planned over the extension of stay-at-home orders.
U.S. Democrats and Republicans are near agreement on approving extra money to help small businesses hurt by the pandemic and could seal a deal as early as Monday, Trump said, despite hopes for a deal on Sunday.
Britain is not considering lifting the lockdown imposed almost four weeks ago given the “deeply worrying” increases in the death toll, a senior minister said on Sunday.
Japan’s exports fell 11.7% in March from a year earlier, Ministry of Finance (MOF) data showed, reflecting a sharp drop in external demand due to the pandemic.
Physical gold demand in China continues to be in the doldrums as the coronavirus-led restrictions stalled activity, with dealers in the top consumer offering massive discounts.
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 1,607.39.
The projected upper bound is: 1,762.53.
The projected lower bound is: 1,603.59.
The projected closing price is: 1,683.06.
A black body occurred (because prices closed lower 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.
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 29.8887. This is not an overbought or oversold reading. The last signal was a sell 2 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 56.94. 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 21 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 23. This is not a topping or bottoming area. The last signal was a sell 1 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 18 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -3.310 at 1,680.880. Volume was 8,900% above average (trending) and Bollinger Bands were 42% wider than normal.
Open High Low Close Volume 1,690.250 1,690.250 1,670.550 1,680.880 15,178
Technical Outlook Short Term: Neutral Intermediate Term: Bullish Long Term: Bullish
Moving Averages: 10-period 50-period 200-period Close: 1,690.72 1,617.80 1,529.09 Volatility: 22 32 20 Volume: 1,518 304 76
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 9.9% above its 200-period moving average and is in an upward 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 out of XAU= (bearish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 10 periods.
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