Gold 1 OZ (XAU=X) Higher as Buyers Bet on More Stimulus after Dismal Job Loss Report

Gold 1 OZ (XAU=X) Higher as Buyers Bet on More Stimulus after Dismal Job Loss Report

Gold 1 OZ (XAU=X) Higher as Buyers Bet on More Stimulus after Dismal Job Loss Report

Gold futures are trading higher late in the session on Thursday after a record surge in U.S. jobless claims weakened the U.S. Dollar and drove up the odds of further government stimulus to combat the devastating effects of the coronavirus pandemic on the U.S. economy.

Furthermore, the price action suggests gold investors may also be betting on additional help from the major central banks including further rate cuts and more aggressive Quantitative Easing (QE) buying.

“More countries are expected to release some sort of stimulus packages which is a big event for gold. In addition to it, unemployment claims jumped. That tells investors that QE is going to have more longevity,” said Michael Matousek, head trader at U.S. Global Investors.

Americans File Record Unemployment Claims

Gold spiked more than 1% higher earlier today after government data showed a record high of more than 3 million Americans filed claims for unemployment benefits last week as strict measures to contain the pandemic curtailed economic activity.

Americans displaced by the coronavirus crisis filed unemployment claims in record numbers last week, with the Labor Department reporting Thursday a surge to 3.28 million. Consensus estimates from economists surveyed by Dow Jones showed an expectation for 1.5 million new claims, although some individual forecasts on Wall Street had been anticipating a much higher number.

The number shatters the Great Recession peak of 665,000 in March 2009 and the all-time mark of 695,000 in October 1982.

“It’s an indication that things are slowing down dramatically. The worse data you can get right now, the (gold) market should respond favorably, because that provides more ammunition for the Fed to be keep on stimulating,” Matousek added.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1,695.57.

The projected lower bound is: 1,554.60.

The projected closing price is: 1,625.09.

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 28 white candles and 22 black candles for a net of 6 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 89.4282. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 8 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 56.56. 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 5 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 69. This is not a topping or bottoming area. The last signal was a buy 5 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 2 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -5.237 at 1,623.737. Volume was 8,900% above average (trending) and Bollinger Bands were 179% wider than normal.

Open     High      Low     Close     Volume___
1,629.0041,634.7641,611.6021,623.737 10,608
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,552.47 1,588.14 1,508.96
Volatility: 37 28 19
Volume: 1,061 212 53

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 7.6% above its 200-period moving average and is in an downward trend. Volatility is high 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 bearish on XAU= and have had this outlook for the last 9 periods.

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