Gold 1 OZ (XAU=X) Strong Dollar Drives Prices Lower

Gold 1 OZ (XAU=X) Strong Dollar Drives Prices Lower

Gold 1 OZ (XAU=X) Strong Dollar Drives Prices Lower

A stronger U.S. Dollar kept a lid on gold prices most of the week as investors responded to dovish announcements from major central banks including the Bank of Canada and the European Central Bank.

In the Euro Zone on Thursday, European Central Bank President Mario Draghi said the European economy was in “a period of continued weakness and pervasive uncertainty”. Conditions in the Euro Zone were perceived as so bad that the ECB:  pushed back the timing of its first post-crisis interest rate hike to 2020, cut its economic forecasts and launched a new round of cheap bank loans.

“A new series of quarterly targeted longer-term refinancing operations (TLTRO-III) will be launched, starting in September 2019 and ending in March 2021, each with a maturity of two years,” the central bank said in a statement.

The TLTROs are loans that the ECB provides at cheap rates to banks in the Euro area. The central bank’s decision comes at a time when there are increasing concerns about growth in the Euro Zone. ECB President Mario Draghi also cited a series of external risks as a reason for the new measures.

“The persistence of uncertainties related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets appears to be leaving marks on economic sentiment,” Draghi told reporters Thursday.

The ECB also kept interest rates unchanged Thursday but updated its guidance for a rate hike. The ECB had previously said that rates would remain at these levels through to the end of summer, but Thursday, it said it now expects its key interest rates “to remain at their present levels at least through the end of 2019.”

The U.S. Dollar also strengthened against the Canadian Dollar after the Bank of Canada (BOC) left its overnight rate at 1.75 percent as expected, citing a slowdown in the global, as well as Canadian economies.

“Recent data suggest that the slowdown in the global economy has been more pronounced and widespread than the Bank had forecast in its January Monetary Policy Report,” said the Bank in a statement announcing the rate hold. “While the sources of moderation appear to be multiple, trade tensions and uncertainty are weighing heavily on confidence and economic activity. It is difficult to disentangle these confidence effects from other adverse factors, but it is clear that global economic prospects would be buoyed by the resolution of trade conflicts.”

The USD/CAD rose as investors reduced the odds of further BOC rate hikes later this year. In 2018, the central bank suggested it would be aggressive in raising the rate throughout 2019, but it now looks as if the Bank will not make another rate move until the fall, with some experts suggesting the Bank could lower the rate.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1,319.04.

The projected lower bound is: 1,275.04.

The projected closing price is: 1,297.04.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 25 white candles and 25 black 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 51.4357. This is not an overbought or oversold reading. The last signal was a buy 1 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 45.05. 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 12 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 -44. This is not a topping or bottoming area. The last signal was a buy 1 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 9 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed down -1.251 at 1,296.759. Volume was 8,900% above average (trending) and Bollinger Bands were 51% wider than normal.

Open High Low Close Volume___
1,298.4501,298.5801,295.9101,296.759 467

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

Moving Averages: 10-period 50-period 200-period
Close: 1,299.46 1,302.58 1,246.54
Volatility: 12 11 11
Volume: 47 9 2

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 4.0% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume into XAU= (bullish). Our trend forecasting oscillators are currently bearish on XAU= and have had this outlook for the last 5 periods.

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