Gold 1 OZ (XAU=X) falls from 7-year high on profit-taking

Gold 1 OZ (XAU=X) falls from 7-year high on profit-taking

Gold 1 OZ (XAU=X) falls from 7-year high on profit-taking

Gold prices fell 1% on Tuesday as investors chose to pocket profits after the metal hit a seven-year high in the previous session, although growing fears over a spike in new coronavirus cases outside of China capped bullion’s losses.

FUNDAMENTALS

* Spot gold was down 0.7% to $1,649.49 per ounce by 0132 GMT, having touched a session low of $1,642.89.

* Bullion rose to a more than seven-year high of $1,688.66 in the previous session.

* U.S. gold futures fell 1.5% to $1,651 an ounce.

* “The 1% fall was because of margin calls but definitely that has triggered an added wave of profit-taking,” said Stephen Innes, chief market strategist at AxiCorp.

* “In this kind of an environment, when stock markets are crashing it is easy to cover margin call. (But) given the overwhelmingly risk-off market, we should see gold find some support,” he added.

* Asian shares extended losses amid fears the virus was rapidly mutating into a pandemic that could cripple global supply chains and wreak far greater economic damage than first thought.

* The death toll climbed to seven in Italy on Monday and authorities sealed off the worst-affected towns, closed schools and halted the carnival in Venice, where there were two cases, while several Middle East countries were dealing with their first infections.

* Investors are pricing in an increased chance the European Central Bank will cut interest rates sooner rather than later, reflecting heightened fears that the virus will spread and hit the euro zone economy hard.

* U.S. Treasury Secretary Steven Mnuchin told Reuters he does not expect the outbreak to have a material impact on the Phase 1 U.S.-China trade deal, although that could change as more data becomes available in coming weeks.

* Financial markets on Monday ratcheted up bets the U.S. Federal Reserve will be pressed to cut interest rates to cushion a feared hit to economic growth from the epidemic.

* The U.S. economy should continue to perform well this year and monetary policy is currently well positioned despite the risk posed by the virus, Cleveland Fed President Loretta Mester said on Monday.

* The Trump administration is considering asking lawmakers for emergency funding to ramp up its response to the fast-spreading coronavirus, a White House spokesman said without providing details.

* Goldman Sachs said commodity prices could fall sharply before Chinese stimulus to combat the coronavirus impact later this year helps the sector achieve its 12-month return forecast of about 10%.

Technical Indicators

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 1,562.38.

The projected upper bound is: 1,679.10.

The projected lower bound is: 1,617.75.

The projected closing price is: 1,648.43.

Candlesticks

A black body occurred (because prices closed lower 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 32 white candles and 17 black candles for a net of 15 white 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 70.9512. This is not an overbought or oversold reading. The last signal was a sell 0 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 71.10. 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 20 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 121.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 6 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 5 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -15.373 at 1,645.050. Volume was 8,900% above average (trending) and Bollinger Bands were 100% wider than normal.

Open     High      Low     Close     Volume___
1,660.4231,660.5551,633.1001,645.050 74,243
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,608.77 1,557.63 1,477.84
Volatility: 13 12 15
Volume: 7,424 1,485 371

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 11.3% 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 out of XAU= (bearish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 4 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.

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