Gold 1 OZ (XAU=X) turns to FOMC minutes after Powell’s comments

Gold 1 OZ (XAU=X) turns to FOMC minutes after Powell’s comments

Gold 1 OZ (XAU=X) turns to FOMC minutes after Powell’s comments

Gold prices and Brent may suffer after the FOMC minutes are published if the underlying tone in the text does not reflect the same level of urgency for easing that investors are expressing. At the time of writing, overnight index swaps are pricing in an 85 percent probability of a third cut this year by the October meeting. However, these hopes may be dashed if the minutes undermined the markets’ dovish expectations.

On October 8, Fed Chairman Jerome Powell’s remarks at the NABE conference in Denver certainly caught investors’ attention, especially after he said the central bank is considering purchasing T-Bills. However, Mr. Powell was quick to dispel any notions that this is a prelude to reintroducing QE. He subsequently reiterated what he has been saying for over a year: the Fed is on a data-dependent path and will adjust policy accordingly.

However, this did not stop gold prices from rising and ultimately ending the day higher on the hopes that the Fed will deliver more cuts as economic conditions worsen. The Chairman added that geopolitical developments continue to be a major factor affecting the outlook along with global developments in general posing a threat to a “favorable” US economic outlook.

Market volatility from the FOMC minutes may also be exacerbated by the update the IMF’s World Economic Outlook. For several publications, the organization has reiterated that global headwinds continue to blow with the sails of the global economy closer to the rocky coast of a recession. Global trade uncertainty is the biggest protagonist with economic conflicts around the world disrupting the flow of critical inputs to power growth.

Gold prices edged as high as $1509.74 for the day but ultimately closed at $1505.62. The yellow metal is now touching falling resistance that forms the upper crust of what appears to be a bearish reversal pattern known as a Descending Triangle. A break above with follow-through would invalidate the pattern while a turn away from resistance would reinforce the strength of resistance.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1,549.83.

The projected lower bound is: 1,466.38.

The projected closing price is: 1,508.11.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

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 62.7010. This is not an overbought or oversold reading. The last signal was a buy 5 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 52.03. 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 30 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 20. This is not a topping or bottoming area. The last signal was a buy 5 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 0 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 0.991 at 1,506.251. Volume was 8,900% above average (trending) and Bollinger Bands were 44% narrower than normal.

Open     High      Low     Close     Volume___
1,505.6601,511.2011,499.3001,506.251 78,905
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1,496.60 1,504.51 1,368.31
Volatility: 15 18 14
Volume: 7,891 1,578 395

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 10.1% above its 200-period moving average and is in an downward trend. Volatility is low 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 20 periods.

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