Gold 1 OZ (XAU=X) may rally further in the days ahead

Gold 1 OZ (XAU=X) may rally further in the days ahead

Gold 1 OZ (XAU=X) may rally further in the days ahead

As the calendar turned from October to November, not much changed for gold prices against most of the major currencies. Gold prices did not make much progress in October, and really, since hitting highs at the end of August and beginning of September against the majors.

Yet significant policy shifts by G10 currencies’ central banks – mainly, the Federal Reserve – should now draw traders’ attention to gold prices once more.

GOLD PRICES RALLY AFTER OCTOBER FED MEETING & US JOBS REPORT

Precious metals stabilized throughout October and were able to begin to turn higher late in the month, thanks in part to the Fed adding to its contemporary central banks’ efforts amid the ‘race to the bottom’ in interest rates.

While the Fed has been part of the cycle for some time, Fed Chair Powell upped the ante at the October Fed meeting by essentially closing off any path to an interest rate hike over the foreseeable future. The October US jobs report was an effective ‘nail in the coffin,’ insofar as a middling US labor market will give the Fed plenty of cover amid a soft inflation environment to keep a dovish rates bias for the foreseeable future. Which, quite frankly, is music for gold traders’ ears.

TOP FX EVENTS IN WEEK AHEAD

As is typical for the start of a new month, the forex economic calendar is saturated with significant economic data that will likely keep gold volatility elevated over the coming days – and in turn, provide opportunities for gold prices to gain legs under their recent turn higher.

On Tuesday, gold prices in AUD-terms (XAU/AUD) will be in focus with the October Reserve Bank of Australia’s meetingon Tuesday. With the Q3’19 New Zealand jobs report also due out on Tuesday, gold prices in NZD-terms (XAU/NZD) will experience significant volatility as well. On Friday, gold prices in CAD-terms (XAU/CAD) will take the spotlight amid the release of the October Canada jobs report.

The other XAU-cross that is likely to see significant movement over the coming week is gold in GBP-terms (XAU/GBP) thanks to the November Bank of England meeting. This BOE meeting will produce a new Quarterly Inflation Report (QIR), which tends to generate excess volatility relative to other BOE meetings during the post-June 2016 Brexit vote era.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1,547.84.

The projected lower bound is: 1,478.76.

The projected closing price is: 1,513.30.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

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.

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 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 73.3273. This is not an overbought or oversold reading. The last signal was a buy 22 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 57.95. 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 47 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 155.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 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 6 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 0.390 at 1,513.550. Volume was -0% below average (neutral) and Bollinger Bands were 55% narrower than normal.

Open     High      Low     Close     Volume___
1,513.1301,515.4101,502.9001,513.550 0
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,497.31 1,504.22 1,385.92
Volatility: 11 15 14
Volume: 0 0 0

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 9.2% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 5 periods.

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