Home Commodities Gold 1 OZ (XAU=X) investors cautioned from buying the precious metal at...

Gold 1 OZ (XAU=X) investors cautioned from buying the precious metal at current price levels


Gold 1 OZ (XAU=X) investors cautioned from buying the precious metal at current price levels

Wells Fargo said that gold could hit $1,400 an ounce soon, but still cautioned investors from buying the precious metal at current price levels, noting that the metal’s downside potential is much higher than its upside.

“It wouldn’t shock us to see gold make a quick run at $1,400 first, before it starts heading lower, toward $1,200,” Wells Fargo head of real asset strategy John LaForge said in a note. “Our bottom line was that gold looks expensive at $1,340.”

At the end of the day, gold does not offer a really good risk/reward trade-off at the moment, according to LaForge. “With roughly $60 of potential upside (to $1,400), and $140 of possible downside (to $1,200) … For serious long-term buyers, we say wait for much lower prices, probably sub-$1,200,” he noted.”

The short-term direction of gold prices will be controlled by the U.S.-China trade spat, which eventually will be resolved, rendering all the short-term gains or losses as only temporary, LaForge pointed out.

“To be clear, we do not recommend buying gold today based upon U.S.-China trade deal fear. We believe that a trade deal between the U.S. and China will get done—and that once the trade fear fades, so will gold,” he wrote.

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 1,308.91.

The projected upper bound is: 1,371.88.

The projected lower bound is: 1,329.44.

The projected closing price is: 1,350.66.


A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

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 59.9604. This is not an overbought or oversold reading. 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 72.57. 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 1 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 98. This is not a topping or bottoming area. 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 buy 13 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 10.325 at 1,349.610. Volume was 8,900% above average (trending) and Bollinger Bands were 106% wider than normal.

Open High Low Close Volume___
1,339.6901,349.9481,338.2501,349.610 12,272

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

Moving Averages: 10-period 50-period 200-period
Close: 1,336.46 1,295.89 1,268.73
Volatility: 9 10 11
Volume: 1,227 245 61

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 6.4% above its 200-period moving average and is in an upward trend. Volatility is low 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 bullish on XAU= and have had this outlook for the last 25 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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