Gold 1 OZ (XAU=X) prices end lower as coronavirus threatens China buying
Gold futures on Tuesday ended lower, pressured as China, one of the commodity’s biggest buyers, faced a viral outbreak that could hurt buying of physical gold at a peak holiday period.
Prices for the gold, however, pared some of their earlier losses as CNN reported Tuesday afternoon that the U.S. Centers for Disease Control and Prevention was expected to announced the first U.S. case of Wuhan coronavirus. Some analysts have said that the spread of the disease would support haven buying in the precious metal.
Gold for February delivery (GCG20) on Comex fell $2.40, or nearly 0.2%, to settle at $1,557.90 an ounce, off the session’s low of $1,546. March silver (SIH20) dropped by 26.5 cents, or 1.5%, to $17.808 an ounce. U.S. markets were closed on Monday in observance of Martin King Luther Jr. Day.
Gold futures posted a climb of roughly 20 cents higher last week, following gains for each of the last three weeks, according to FactSet data. Silver fell about 0.2% for the week.
According to the Associated Press, six people have died and 291 have been infected by the virus in China, the National Health Commission said Tuesday.
A number of countries have already adopted screening measures for travelers from China, especially those arriving from Wuhan, due to concerns about a global outbreak similar to SARS, another coronavirus that spread from China to more than a dozen countries in 2002-2003.
Bullion may draw haven bids if the virus manifests into a genuine outbreak. Chinese health experts have confirmed that it could be transmitted between humans.
Asian markets, reacted poorly to the development, with China’s CSI 300 index (XX:000300) closing 1.7% lower, while Hong Kong’s Hang Seng stock index (HK:HSI) slumped 2.8%.
“Gold is set to remain the prime destination for safe haven buyers this week as developments in China and caution ahead of the Davos summit dent risk sentiment,” wrote Otunuga, referring to an annual gathering of business leaders in Davos, Switzerland.
Chintan Karnani, chief market analyst at Insignia Consultants, however, does not believe that the virus in China is behind the current selloff in gold.
Gold fell, in part, due to profit taking following a three-day holiday weekend in the U.S. as well as a “failed attempt to break key technical resistance of $1574,” said Karnani. “I do not see any significant fall in Chinese gold buying (during the Chinese New Year) unless the virus in China turns into an epidemic.”
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 1,514.62.
The projected upper bound is: 1,583.03.
The projected lower bound is: 1,536.36.
The projected closing price is: 1,559.69.
A black body occurred (because prices closed lower than they opened).
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 30 white candles and 19 black candles for a net of 11 white candles.
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 76.6426. This is not an overbought or oversold reading. The last signal was a buy 4 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 64.49. 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 6 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 22. This is not a topping or bottoming area. The last signal was a sell 8 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 4 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed down -3.600 at 1,557.680. Volume was 8,900% above average (trending) and Bollinger Bands were 42% 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: 1,554.78 1,498.67 1,439.80
Volatility: 11 10 14
Volume: 7,074 1,415 354
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 8.2% 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 out of XAU= (bearish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 26 periods.