Home Commodities Gold 1 OZ (XAU=X) experiencing a corrective pullback from recent gains

Gold 1 OZ (XAU=X) experiencing a corrective pullback from recent gains

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Gold bars stored in the HSBC vaults in London are seen November 16, 2007. Twice a day, representatives of five banks pick up the phone to trade physical gold and arrive at the London "fixing" price, which then becomes a benchmark for gold around the world. To match feature GOLD-FIXING/ REUTERS/World Gold Trust Services/Handout (BRITAIN). EDITORIAL USE ONLY. NOT FOR SALE FOR MARKETING OR ADVERTISING CAMPAIGNS. NO ARCHIVES. NO SALES.

Gold 1 OZ (XAU=X) experiencing a corrective pullback from recent gains

Gold prices are modestly lower in early morning U.S. trading Wednesday, on a corrective pullback from recent gains and some position-squaring by the shorter-term futures trades ahead of this afternoon’s FOMC statement. August gold futures were last down $3.60 an ounce at 1,346.90. July Comex silver prices were last down $0.038 at $14.955 an ounce.

Focus of the world marketplace at mid-week is squarely on the Federal Open Market Committee (FOMC) meeting that began Tuesday morning ends this afternoon with a statement. The majority of Fed watchers believe the Fed will not raise interest rates at this meeting, but FOMC members may lean toward a more dovish stance on monetary policy, to set the table for a rate hike in the coming few months. However, a few do think the Fed will move to lower U.S. interest rates today. Look for more active trading in many markets in the immediate aftermath of the 2:00 p.m. EDT FOMC statement

Technically, the gold bulls have the firm overall near-term technical advantage. Prices are in a choppy, seven-week-old uptrend on the daily bar chart. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at last week’s high of $1,362.20.

Bears’ next near-term downside price breakout objective is pushing August futures prices below solid technical support at last week’s low of $1,323.60. First resistance is seen at today’s high of $1,351.10 and then at this week’s high of $1,358.50. First support is seen at the overnight low of $1,344.80 and then at this week’s low of $1,336.60.

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 1,310.38.

The projected upper bound is: 1,382.53.

The projected lower bound is: 1,339.45.

The projected closing price is: 1,360.99.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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 25 white candles and 25 black candles.

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 67.4355. This is not an overbought or oversold reading. The last signal was a sell 7 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 75.89. 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 2 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 150.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 buy 14 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 13.790 at 1,359.870. Volume was -0% below average (neutral) and Bollinger Bands were 102% wider than normal.

Open High Low Close Volume___
1,346.1601,362.1001,340.7501,359.870 0

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1,339.12 1,296.94 1,269.53
Volatility: 10 11 11
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.

Summary

PREC.M.XAU= is currently 7.1% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 bullish on XAU= and have had this outlook for the last 26 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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