Gold 1 OZ (XAU=X) steady in volatile action in the aftermath of the first U.S. interest rate cut from the Federal Reserve in 11 years

Gold 1 OZ (XAU=X) steady in volatile action in the aftermath of the first U.S. interest rate cut from the Federal Reserve in 11 years

Gold 1 OZ (XAU=X) steady in volatile action in the aftermath of the first U.S. interest rate cut from the Federal Reserve in 11 years

Gold prices are trading near steady in volatile action in the aftermath of the first U.S. interest rate cut from the Federal Reserve in 11 years. The yellow metal dropped to down around $10 on the day just after the FOMC statement. It could be that the precious metals bulls were initially a bit disappointed the Fed only cut rates by 0.25% instead of 0.50%. Or, it could be the classic “buy the rumor, sell the fact” phenomenon that occurs when the market has fully factored into prices a highly expected outcome of an event. However, gold traders quickly stepped in to “buy the dip” to push gold prices back higher. December gold futures were last down $0.70 an ounce at 1,441.00. September Comex silver prices were last down $0.083 at $16.465 an ounce.

The main economic data point of the week saw the Federal Open Market Committee (FOMC) statement on U.S. monetary policy cut its main interest rate, the “fed funds rate” by 0.25%, to a range of 2% to 2.25%. Most market watchers reckoned a 0.25% interest rate reduction was in the cards, but a few did look for a bigger 0.5% rate cut. The FOMC vote was 8-2 in favor of the quarter-point cut. This was the first rate decrease by the Federal Reserve in 11 years. The FOMC statement said the rate cut was enacted due to very low inflation pressures and concerns about global economic growth. The statement also suggests the door is opened to more interest rate reductions in the months ahead.

Technically, December gold futures prices closed nearer the session low and scored a mildly bearish “outside day” down today. The bulls have the firm overall near-term technical advantage and are keeping in place a nine-week-old uptrend on the daily bar chart. Gold bulls’ next upside near-term price breakout objective is to produce a close above solid technical resistance at the July high of $1,467.00. Bears’ next near-term downside price breakout objective is pushing prices below solid technical support at the July low of $1,396.40. First resistance is seen at today’s high of $1,447.80 and then at the June high of $1,453.70. First support is seen at this week’s low of $1,427.50 and then at last week’s low of $1,423.90. 

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1,454.24.

The projected lower bound is: 1,381.03.

The projected closing price is: 1,417.63.

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 29 white candles and 21 black candles for a net of 8 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 58.4384. This is not an overbought or oversold reading. The last signal was a sell 8 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 52.98. 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 19 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 -18. This is not a topping or bottoming area. The last signal was a sell 7 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 19 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -15.796 at 1,414.804. Volume was 8,900% above average (trending) and Bollinger Bands were 26% narrower than normal.

Open     High      Low     Close     Volume___
1,430.1001,432.6931,411.5501,414.804 20,173

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish

Moving Averages: 10-period     50-period     200-period
Close: 1,424.29 1,375.72 1,300.99
Volatility: 16 17 12
Volume: 2,017 403 101

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 8.7% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect very strong flows of volume out of XAU= (bearish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 0 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

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