Gold 1 OZ (XAU=X) geopolitical events to continue dictating price momentum
The price action of gold in the global market was well within my previous monthly forecast despite spot gold closing for the month of February on a dovish note. In my forecast for February, I had mentioned that the price action of gold is going to be influenced by and controlled by the proceedings of geopolitical events and that neither Sino-U.S. trade talks nor Brexit will see any resolution during February.
Both predictions came true. However, the price didn’t hit a multi-year high as expected. In fact, the price of yellow metal didn’t even hit 2018 highs but managed to climb to new 10-month highs on a weak US dollar and increased demand for safe-haven assets. However, conflicting headlines with most updates hinting at positive proceedings in Sino-U.S. trade talks and rebound of US Dollar near the end of the month resulted in erasing most of the gains made in early February and closing on a dovish note.
While headlines hinted at positive progress in Sino-U.S. trade talks initially, there wasn’t much progress and there were even conflicting comments near the end of the month. Further increased risk appetite at the last week of February also added to bearish influence in precious metals market taking away a significant amount of funds from the market.
Moving forward this month, geopolitical issues remain the main theme and focus of investors attention. As the deadlines approach, Brexit is likely to see some serious progress unless there is a delay deadline and Sino-U.S. trade talks are likely to see a new milestone.
The financial year comes to an end in March and investors are likely to book maximum profits before making any new major bets and risk on trading activity is likely to remain high in global markets and this should greatly limit activity – trading volume and fund flow in the precious metals market. Chances are the price action in the spot market for gold is likely to remain trapped inside a range of $1275 and $1300 across the month as demand for safe-haven assets, increased demand expected from India in the physical market owing to marraige season in the month ahead of expected demand from emerging markets on low price of gold is likely to sustain price action above $1275 handle per ounce.
However, a dovish turn out in either Brexit or Sino-U.S. trade talk will immediately push the price above $1300 handle and depending upon further progress gold could likely go back near 2019 high’s but given recent proceedings of major global events, there is very little chance for risk-averse trading and increased safe-haven demand in the month ahead which should keep price action contained within above-mentioned price levels.
Overall, the bias in prices is: Sideways.
The projected upper bound is: 1,316.20.
The projected lower bound is: 1,271.77.
The projected closing price is: 1,293.98.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 8.2174. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 6 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 39.61. 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 6 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 -161.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 sell 3 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -19.348 at 1,293.312. Volume was -0% below average (neutral) and Bollinger Bands were 2% narrower than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,323.79 1,300.37 1,246.78
Volatility: 14 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.
PREC.M.XAU= is currently 3.7% 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 into XAU= (bullish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 60 periods.