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Tuesday, September 28, 2021

Gold 1 OZ (XAU=X) Prices Pull Back After Breaking $1,700 on Risk Asset Meltdown

Gold 1 OZ (XAU=X) Prices Pull Back After Breaking $1,700 on Risk Asset Meltdown

Gold prices hit their highest levels in eight years on Monday on a fresh wave of panicked flight-to-safety trades across the world that also drove U.S. and European government bond yields to historic lows.

However, after briefly breaking through the $1,700 level, they retreated later in the day as U.S. stock markets regained a degree of composure.

By 11:35 AM ET (1535 GMT), gold futures for delivery on the Comex exchange were at $1,673.00 a troy ounce, up less than 0.1% on the day. Spot gold was down 0.2% at $1,671.33.

Elsewhere, silver futures fell 2.2% to $16.88 while platinum fell 3.5% to $865.10. Copper futures, ominously, broke clearly below $2.50 a pound to their lowest since December 2016. They recovered later to trade at $2.49, down 2.6% on the day.

Again there were anecdotal reports of some holders being forced to liquidate gold in order to meet margin calls on other portfolio positions.

If the pattern of last month is repeated, then that’s likely to cause only a temporary pullback in gold prices, given the unparalleled attraction at times of extreme market fear of an asset that is nobody else’s liability. According to data compiled by Bloomberg, money flooded into gold-backed ETFs last week at a rate not seen since September, buying a net 1.2 million ounces.

With investors discounting ever-more aggressive easing by central banks, with risk assets being liquidated across Asia, Europe and the U.S., and with ever more government bonds offering negative real and even negative nominal yields (the U.K. 2-year yield broke below zero for the first time on Monday), assets under management at gold-backed ETFs are now at record highs.

Expectations that central banks will loosen monetary policy further to support the global economy have strengthened still further after Saudi Arabia and Russia dissolved their four-year alliance to support oil prices. Crude fell 30% overnight and even if it stabilizes somewhat higher, the price collapse can only create a further disinflationary shock that will raise the pressure on central banks to ease.

The European Central Bank’s governing council is due to meet this week, against a backdrop of criticism that it has slipped behind the curve in offering only lukewarm reassurances of action. With its deposit rate already at -0.5% and bond purchases already running at 20 billion euros a month, some see the ECB as already out of bullets.

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 1,572.51.

The projected upper bound is: 1,729.91.

The projected lower bound is: 1,636.04.

The projected closing price is: 1,682.97.


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 32 white candles and 18 black candles for a net of 14 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 86.6843. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 67.24. 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 9 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 136.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. 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 buy 2 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 5.833 at 1,679.683. Volume was 8,900% above average (trending) and Bollinger Bands were 106% wider than normal.

Open     High      Low     Close     Volume___
1,694.0001,702.5651,657.3601,679.683 67,168
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,639.05 1,583.51 1,493.55
Volatility: 32 19 16
Volume: 6,717 1,343 336

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 12.5% 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 13 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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