Gold 1 OZ (XAU=X) supported by trade tensions and crumbling bond yields

Gold 1 OZ (XAU=X) supported by trade tensions and crumbling bond yields

Gold 1 OZ (XAU=X) supported by trade tensions and crumbling bond yields

Gold prices remain close to their 2019 peaks, buoyed up by a range of supportive factors which have added to the luster of all perceived haven assets.

Trade tensions remain very high of course, particularly between China and the US where signs of rapprochement are as elusive as ever. China is not the only economy in White House sights, and, while there seems to be some more trade geniality around between the US and Mexico, it is hard to be sure of anything until agreement is reached. It may be, but there’s no sign yet.

It seems all-too likely that trade news flow will continue to dominate short-term sentiment toward gold in the coming week.

It won’t be the only factor. The overall backdrop is becoming more friendly to non-yielding assets like precious metals as the yield on ‘risk free’ paper like Treasuries and German bunds heads lower. With German yields close to record lows markets are clearly nor pricing in much in the way of European growth ahead. Federal Reserve Chairman Jerome Powell last week said the central bank will act as appropriate to sustain expansion. Sure enough, investors are weighing the prospect of lower US rates.

The coming week will bring little in the way of first-tier economic data. European Central Bank President Mario Draghi will speak on Wednesday, a day which will also bring US Consumer Price Index figures. Both events could have some bearing on gold market action, but they are unlikely to move the story on enough to change the current mood.

That said gold has come up quite far, quite fast and, assuming that the trade story doesn’t meaningfully move on, it may pause for breath. It’s a neutral call from me this week.

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 1,300.19.

The projected upper bound is: 1,361.29.

The projected lower bound is: 1,321.32.

The projected closing price is: 1,341.30.

Candlesticks

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 25 white candles and 25 black candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 81.5204. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 76.81. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 75 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 122.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 11 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 6 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 5.500 at 1,340.300. Volume was -0% below average (neutral) and Bollinger Bands were 83% wider than normal.

Open High Low Close Volume___
1,335.2001,348.0821,329.6801,340.300 0

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1,309.13 1,289.54 1,263.85
Volatility: 11 10 11
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 6.0% 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 18 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.

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