Gold 1 OZ (XAU=X) Likely to be Bid as Coronavirus Fears Intensify
Gold prices are trading steady at the mid-session on Monday. The market is being supported by a drop in U.S. Treasury yields and lower demand for risky assets. Earlier in the session, gold jumped 1% to a near-three-week high as growing concerns that the coronavirus outbreak could impact the global economy drove investors into gold for protection.
Essentially, risk aversion is pushing gold prices higher. Over the weekend, the news showed the coronavirus was spreading globally and the death toll in China was rising. This encouraged investors to dump risky assets on the notion the spread of the disease would lead to a global economic slowdown.
The U.S. Dollar rose to near a two-month high on Monday as investors sought protection in the safe-haven currencies. The move dampened demand for dollar-denominated gold, helping to cap gains. A drop in U.S. 10-year Treasury yields to a three month low, helped underpin gold prices.
With an incubation period for the virus of up to two weeks, the lockdowns in China could last for several weeks. This could put a negative impact on the major financial markets, while driving investors into gold for protection.
Investors are also starting to prepare for the U.S. Federal Reserve’s first policy meeting of this year on January 28-29. The Fed is widely expected to keep interest rates and monetary policy unchanged.
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 1,521.08.
The projected upper bound is: 1,607.97.
The projected lower bound is: 1,560.99.
The projected closing price is: 1,584.48.
A white body occurred (because prices closed higher than they opened).
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 31 white candles and 18 black candles for a net of 13 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 84.1877. 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 73.20. 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 10 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 216.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.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 8 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 11.886 at 1,582.251. Volume was 8,900% above average (trending) and Bollinger Bands were 7% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,560.41 1,506.72 1,445.67
Volatility: 6 10 14
Volume: 7,182 1,436 359
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 9.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 30 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.