Gold 1 OZ (XAU=X) hitting a 6-year high in US dollar terms

Gold 1 OZ (XAU=X) hitting a 6-year high in US dollar terms

Gold 1 OZ (XAU=X) hitting a 6-year high in US dollar terms

The spot price of gold has continued to storm upwards, hitting a 6-year high in US dollar terms and a new all-time high in our local Aussie dollars.

Spot prices overnight hit US$1,438 per ounce, which is the yellow metal’s highest price since 2013. In Australian dollar terms, gold hit its highest level ever with an ounce of gold last night costing $2,058.

Today, the gold price is pulling back from these highs, with prices at the time of writing hovering around US$1,405 and A$2,020, but there is no doubt that these new levels reached overnight are very significant.

Gold has now broken the psychologically important US$1,400/oz level and it is possible that we begin to see a snowball effect on the gold price now this level has been breached.

The catalyst for this move appears to be global tensions surrounding the United States (US) and Iran, as well as the renewed speculation over the direction of US interest rates set by the US Federal Reserve. Speculation has been mounting that the Fed plans on reversing the hawkish pattern that it has recently adopted and may even cut US interest rates later this year. Since interest rates set the ‘risk-free’ rate of return of US government bonds, if they are cut, it increases the appeal of gold as an asset, as gold has no yield as an investment.

Comments out from the Fed Chair Jerome Powell today seem to have been behind the gold price moving off the boil this morning. Powell failed to shed any new light on the direction of interest rates, so traders likely took some profits off the table and the gold price has fallen back from its highs, but still in consolidation territory.

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 1,337.35.

The projected upper bound is: 1,433.19.

The projected lower bound is: 1,382.64.

The projected closing price is: 1,407.92.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white 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 80.5833. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 12 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 75.03. 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 7 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 105.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 12 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 19 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -17.515 at 1,405.335. Volume was 8,900% above average (trending) and Bollinger Bands were 164% wider than normal.

Open High Low Close Volume___
1,423.5101,423.6551,401.9801,405.335 13,980

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

Moving Averages: 10-period     50-period     200-period
Close: 1,376.23 1,308.54 1,274.71
Volatility: 16 12 12
Volume: 1,398 280 70

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 10.2% 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 31 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.

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