Gold 1 OZ (XAU=X) fell as Sino-U.S. trade tensions and uncertainty over a deal weighed on yuan

Gold 1 OZ (XAU=X) fell as Sino-U.S. trade tensions and uncertainty over a deal weighed on yuan

Gold 1 OZ (XAU=X) fell as Sino-U.S. trade tensions and uncertainty over a deal weighed on yuan

Gold prices fell on Monday as Sino-U.S. trade tensions and uncertainty over a deal weighed on yuan, making bullion expensive for buyers in world’s largest consumer – China.

Spot gold was down 0.3% at $1,282.78 per ounce, as of 0715 GMT.

U.S. gold futures slipped 0.2% to $1,283.40 an ounce.

“Gold price in yuan has risen fairly sharply since early May and Shanghai premiums are softening. That is probably taking the edge off demand and maybe inducing some people to offer (sell) gold,” said Nicholas Frappell, global general manager, ABC Bullion.

The trade war between the world’s two leading economies escalated on Friday, with the United States hiking tariffs on $200 billion worth of Chinese goods after Trump said Beijing “broke the deal” by reneging on earlier commitments. China has vowed to retaliate, without giving details.

The United States and China appeared at a deadlock over trade negotiations on Sunday as Washington demanded promises of concrete changes to Chinese law and Beijing said it would not swallow any “bitter fruit” that harmed its interests.

The offshore Chinese yuan dropped to its lowest levels in more than four months at 6.904 to the dollar. It last stood down 0.8% at 6.898 per dollar. A weaker yuan makes gold expensive for buyers in China.

“Markets are still living in some form of half-glass full optimism, but that is likely to erode with time as the reality of a full-blown trade war sinks in,” said Howie Lee, economist, OCBC Bank.

“I expect demand for gold to gain traction in the coming weeks,” Lee added.

While gold has managed to find support due to a risk-aversion mood among investors, prices have been stuck in a $15 dollar range over the past week despite the slump in global markets.

Signals are mixed for spot gold, as it is stuck in a neutral range of $1,284-$1,291 per ounce, according to Reuters technical analyst Wang Tao.

While holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.9 percent on Friday, speculators raised their net-long position in gold in the week ended May 7. “Although there was not much propulsion this past week, we think the momentum (in gold) could build, especially if equity weakness remains deep and protracted,” Meir said.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1,302.32.

The projected lower bound is: 1,263.98.

The projected closing price is: 1,283.15.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with PREC.M.XAU=). It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.

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 58.3719. This is not an overbought or oversold reading. The last signal was a buy 14 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 48.96. 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 sell 56 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 76. This is not a topping or bottoming area. The last signal was a sell 0 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 10 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -2.249 at 1,283.351. Volume was 8,900% above average (trending) and Bollinger Bands were 59% narrower than normal.

Open High Low Close Volume___
1,286.3101,288.5051,281.3501,283.351 9,804

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1,280.65 1,290.92 1,254.43
Volatility: 7 9 11
Volume: 980 196 49

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 2.3% above its 200-period moving average and is in an downward 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 bearish on XAU= and have had this outlook for the last 31 periods.

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