Gold 1 OZ (XAU=X) holding $1,500 after fractured Federal Reserve cuts rates
Gold prices are under pressure but holding critical support above $1,500 an ounce as the Federal Reserve cuts interest rates but strikes fairly neutral tone on the U.S. econom and a fractured central bank.
In a widely anticipated move Wednesday, the U.S. central bank cut interest rates by 25 basis points, lowering the interest rate band to between 1.75% and 2.00%.
Gold prices were holding modest gains ahead of the central bank’s monetary policy decision and has not lost some ground following less dovish than expected sentiments. December gold futures last traded at $1,507.60 an ounce, down 0.34% on the day.
In its monetary policy statement the central bank noted that economic activity is been rising at “a moderate pace.” The central bank also remains optimistic that the economy will continue to see positive growth in a low rate environment.
The following is a recap of the Federal Reserve’s economic projections.
In the latest interest rate projections, also known as the dot plots, the central bank’s median forecast is for interest rates to be around 2.9% this year and next, down from June’s forecast of 2.4%. In the long-term, the central bank sees interest rates at 2.1%, in 2021, down from the previous forecast of 2.4%. For 2020 the central bank sees interest rates at 2.4%.
Looking at growth, the Federal Reserve expects U.S. gross domestic product to grow by 2.2% in 2019, up slightly from June’s estimates. Economic activity is expected to grow 2.0% in 2020, unchanged from June’s estimates; the economy is expected to grow 1.9% in 2020, up from the previous estimate of 1.8%. In the first look for 2022, the central banks expects to see growth of 1.8%.
The committee sees a relatively stable labor market for the next few years, as the unemployment rate is expected to hover around 3.7% this year and next, relatively unchanged from the June projections. The unemployment rate is expected to rise to 3.8% in 2021, and 3.9% by 2022.
Despite persistently weak inflation pressures throughout the past year, the U.S. central bank continues to expect prices pressures to continue to build. The projections show inflation rising 1.5% this year rise 1.9% next year and hitting 2% in 2021 and 2022.
Core inflation expectations, which strip out volatile food and energy prices, are expected to push to 1.8% this year.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 1,532.06.
The projected lower bound is: 1,449.43.
The projected closing price is: 1,490.75.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.
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 31.1192. This is not an overbought or oversold reading. The last signal was a buy 3 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 46.35. 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 15 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 -71. This is not a topping or bottoming area. The last signal was a buy 4 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 14 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -12.864 at 1,489.336. Volume was 8,900% above average (trending) and Bollinger Bands were 8% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,498.38 1,479.78 1,349.98
Volatility: 16 18 14
Volume: 6,615 1,323 331
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 10.3% 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 out of XAU= (bearish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 5 periods.
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