Gold 1 OZ (XAU=X) Powell cited several concerns regarding the U.S. economy that traders are deeming dovish on monetary policy

Gold 1 OZ (XAU=X) Powell cited several concerns regarding the U.S. economy that traders are deeming dovish on monetary policy

Gold 1 OZ (XAU=X) Powell cited several concerns regarding the U.S. economy that traders are deeming dovish on monetary policy

Gold prices are solidly higher and near daily highs in early U.S. trading Wednesday, following the just-released prepared text from Federal Reserve Chairman Jerome Powell for his speech to the U.S. House of Representatives. Powell cited several concerns regarding the U.S. economy that traders are deeming dovish on monetary policy. August gold futures were last up $7.20 an ounce at 1,407.90. September Comex silver prices were last up $0.128 at $15.27 an ounce.

Powell is his text said since the June FOMC meeting uncertainties, including world trade tensions, global growth and very low inflation, continue to cloud the outlook for the U.S. economy and these matters are not improving. He said the U.S. economic outlook is solid, but the prospects for other major world economies are worrisome. The marketplace is reading his remarks as dovish on U.S. monetary policy, which in turn strongly suggest the Fed will cut U.S. interest rates sooner rather than later, and possibly later this month. That’s a bullish scenario of the precious metals markets.

Technically, the gold bulls have the overall near-term technical advantage. However, a six-week-old uptrend on the daily bar chart is still in some jeopardy. Bulls need to show more power soon to keep it alive. Bulls’ next upside price objective is to produce a close in August futures above solid resistance at the June high of $1,442.90.

Bears’ next near-term downside price breakout objective is pushing August futures prices below solid technical support at last week’s low of $1,384.70. First resistance is seen at $1,420.00 and then at $1,425.00. First support is seen at $1,400.00 and then at the overnight low of $1,391.80.

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 1,353.33.

The projected upper bound is: 1,453.64.

The projected lower bound is: 1,389.65.

The projected closing price is: 1,421.65.

Candlesticks

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 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white 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 40.1465. This is not an overbought or oversold reading. The last signal was a sell 9 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 65.86. 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 4 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 14. This is not a topping or bottoming area. The last signal was a sell 9 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 sell 4 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 21.000 at 1,418.800. Volume was 8,900% above average (trending) and Bollinger Bands were 75% wider than normal.

Open High Low Close Volume___
1,397.6001,419.0001,389.5501,418.800 31,415

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

Moving Averages: 10-period     50-period     200-period
Close: 1,406.57 1,334.46 1,285.25
Volatility: 22 15 12
Volume: 3,142 628 157

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 10.4% 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 into XAU= (bullish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 41 periods.

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