Gold 1 OZ (XAU=X) Prices Fall After Failure to Hold Above $1,700

Gold 1 OZ (XAU=X) Prices Fall After Failure to Hold Above $1,700

Gold 1 OZ (XAU=X) Prices Fall After Failure to Hold Above $1,700

Gold prices fell on Tuesday as risk assets stabilized in the aftermath of Monday’s rout, while higher bond yields also helped to restore the relative attractiveness of other havens than bullion.

By 12 PM ET (1600 GMT), gold futures for delivery on the Comex exchange were down 1.2% at $1,656.60 a troy ounce. Spot gold was down 1.4% at $1,656.64.

U.S. Treasury yields were between six and nine basis points higher along the yield curve, with the 10-Year Treasury benchmark at 0.60%. The dollar index, which tends to move inversely to gold, rose 0.9% after Monday’s steep selloff.

“Conviction levels have to be running low right now, especially after failing to breach $1,700 when it appeared all the correlations stars were aligned,” said Stephen Innes, Asia-Pacific market strategist with AxiTrader.

Current prices have already embedded high expectations that the Federal Reserve will cut U.S. interest rates to near zero by the middle of this year. Investing.com’s Fed Rate Monitor Tool suggests that investors see a 50-basis-point cut at the Fed’s March policy meeting as certain, with a 62% chance of another 25 basis points in April.  

While potential demand from portfolio investors appears unlimited in a world of high risk aversion and negative inflation-adjusted returns on almost all U.S. and European government debt, the loss of physical buyers, notably in China, has removed an important prop to demand.

China’s central bank hasn’t added to its gold reserves since October, while a new report released by the World Gold Council on Tuesday showed a steep drop in demand both from Chinese bar and coin investors and from jewelers last year due to surging prices. Chinese bar and coin demand fell by nearly one-third to around 210 tons last year, its lowest since 2014.

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 1,572.80.

The projected upper bound is: 1,700.75.

The projected lower bound is: 1,602.67.

The projected closing price is: 1,651.71.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 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 68.3997. This is not an overbought or oversold reading. The last signal was a sell 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 57.89. 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 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 55. This is not a topping or bottoming area. The last signal was a sell 0 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 3 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -30.530 at 1,649.070. Volume was -0% below average (neutral) and Bollinger Bands were 94% wider than normal.

Open     High      Low     Close     Volume___
1,678.6001,680.0601,641.8101,649.070 0
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,640.44 1,586.15 1,495.17
Volatility: 33 19 16
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 10.3% 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 14 periods.

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