Gold 1 OZ (XAU=X) price falls as investors look beyond safe-haven assets

Gold 1 OZ (XAU=X) price falls as investors look beyond safe-haven assets

Gold 1 OZ (XAU=X) price falls as investors look beyond safe-haven assets

Gold slipped to an over one-week low on Tuesday as strength in equities markets and hopes for a smooth signing of the US-China phase 1 trade deal tarnished bullion’s safe-haven appeal, while palladium rose to a record high.

Spot gold dipped 0.3% to $1,543.91/oz by 10.43am GMT. Earlier, prices fell to their lowest since January 3 at $1,535.63/oz. US gold futures dropped 0.4% to $1,544.60/oz. “As long as the stocks continue to make these record highs, there is no real need for the insurance policies you’ll find in gold,” Saxo Bank analyst Ole Hansen said.

“We have got the signing of the trade deal … we probably are not going to see anyone rocking the boat at this stage but nevertheless it’ll give the market an opportunity to read the text and see what is in the deal.”

On Monday, just a day before the phase 1 trade deal signing, the US treasury dropped China’s designation as a currency manipulator, fuelling market optimism.

“In the current market environment, characterised as it is by high risk appetite among market participants, gold is not in demand. The news backdrop at present is not conducive to rising gold prices, and is more likely to cause the correction to continue,” Commerzbank analysts wrote in a note.

Bullion rose to a near seven-year high last week on worries regarding the US-Iran conflict but the rally was short lived in the absence of any further escalation in tensions. Analysts say investors are still taking some profits following that huge spike in prices. “That has also been noted in the exchange-traded funds market where there has been some quite sizeable reductions since we reached that high,” Saxo Bank’s Hansen said.

Also on investors’ radar was the US Federal Reserve’s Beige Book of economic conditions due on Wednesday.

Palladium hit a record high of $2,150.83/oz and was on track for a ninth straight session of gains supported by a sustained supply deficit. The metal, widely used in making of catalytic converters used in exhaust systems of vehicles, was up 0.7% to $2,146.45/oz.

Elsewhere, silver was down 1% at $17.78/oz, having hit its lowest since December 24 at $17.64/oz earlier in the session, while platinum fell 0.5%, to $969.21/oz. 

Technical Indicators

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 1,513.32.

The projected upper bound is: 1,582.10.

The projected lower bound is: 1,530.69.

The projected closing price is: 1,556.39.

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 29 white candles and 20 black candles for a net of 9 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with PREC.M.XAU=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 22.0129. This is not an overbought or oversold reading. The last signal was a buy 0 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 65.79. 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 2 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 38. This is not a topping or bottoming area. 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 sell 0 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 8.976 at 1,555.100. Volume was 8,900% above average (trending) and Bollinger Bands were 95% wider than normal.

Open     High      Low     Close     Volume___
1,546.0101,557.9851,545.7601,555.100 83,823
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,553.93 1,490.88 1,434.55
Volatility: 15 11 14
Volume: 8,382 1,676 419

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 8.4% 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 22 periods.

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