Gold 1 OZ (XAU=X) Prices Surge on Surprise Fed Rate Cut
Gold prices surged higher on Tuesday as the Federal Reserve surprised market participants with a 50-basis point interest rate cut. The Fed has not performed an inter-meeting cut since 2008 during the great financial crisis. The Fed pointed to the uncertainty over the coronavirus and is trying to head off a decline in economic activity when or if the virus spreads across the United States. The US 10-year yield moved below 1% for the first time in history, which weighed on the US dollar and paved the way for higher gold prices.
Gold prices surged higher rising 3.5% breaking through short term resistance and poised to test the February highs at 1,690. Short term support is seen near the 10-day moving average at 1,618. Additional resistance is seen near the 50-day moving average at 1,573.
Medium-term momentum is neutral. The whipsaw price action has not allowed momentum to accelerate. The MACD recently generated a crossover sell signal and is now poised to generate a buy signal. The downward momentum of the fast stochastic seems to have halted which also reflects decelerating momentum and consolidation.
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 1,568.87.
The projected upper bound is: 1,689.58.
The projected lower bound is: 1,599.46.
The projected closing price is: 1,644.52.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 white candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 61.6208. This is not an overbought or oversold reading. The last signal was a sell 6 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 61.06. 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 64. This is not a topping or bottoming area. The last signal was a sell 5 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 2 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 2.191 at 1,641.660. Volume was 8,900% above average (trending) and Bollinger Bands were 91% 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: 1,629.60 1,573.89 1,488.06
Volatility: 32 18 16
Volume: 5,647 1,129 282
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 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 10 periods.
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