Look for a big move in Gold (XAU=X) this week

Look for a big move in Gold (XAU=X) this week

Look for a big move in Gold (XAU=X) this week

Gold futures went on a roller-coaster ride last week, first rallying to a 10-month high before giving back most of those gains then rebounding late in the week to settle higher.

Early in the week, the market was driven higher by a weaker U.S. Dollar, which led to increased foreign demand for the dollar-denominated asset. Optimism around U.S.-China trade discussions dimmed the dollar’s appeal.

Gold prices peaked for the week after the U.S. Federal Reserve’s Monetary Policy Meeting Minutes were perceived as less-dovish. This helped drive up U.S. Treasury yields, helping to make gold a less-attractive investment. Higher rates reduce investor interest in non-yielding bullion. Gold was able to bounce back, however, on Friday to post its second weekly gain as disappointing U.S. economic data stoked worries about a global slowdown.

Treasury yields rise. If traders continue to believe the Fed is on course to raise rates at least once in 2019 then gold may have trouble rallying much above last week’s high at $1349.80. If this is the case then gold is more likely to pullback at least 50% of this year’s range into $1315.60.

If Treasury investors start to believe the U.S. economy is ready to turn south then this will take a Fed rate hike off the table. This will lead to lower rates and a weaker dollar. If this becomes the case then gold it likely to resume its uptrend.

So instead of trying to react to every economic report, just focus on Treasury yields. If yields rise then look for gold to retreat. If yields fall then look for gold to be underpinned. Furthermore, just watching and reacting to the dollar can get confusing at times because firstly, the dollar is index is manipulated by the Euro, and secondly, the dollar is not only being influenced by Treasury yields, but also safe haven demand at times.

Treasury yields are currently posting a chart pattern that suggests the return of heightened volatility. This translates into the same for gold. Look for a big move in gold this week. If yields plunge then gold should soar.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1,350.72.

The projected lower bound is: 1,308.13.

The projected closing price is: 1,329.42.

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 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 52.1547. This is not an overbought or oversold reading. The last signal was a sell 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 60.52. 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 1 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 65. This is not a topping or bottoming area. The last signal was a sell 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 buy 3 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 4.600 at 1,327.710. Volume was -0% below average (neutral) and Bollinger Bands were 16% narrower than normal.

Open High Low Close Volume___
1,323.4301,333.0901,321.0801,327.710 0

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

Moving Averages: 10-period 50-period 200-period
Close: 1,321.48 1,293.47 1,246.23
Volatility: 12 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 6.5% above its 200-period moving average and is in an upward 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 bullish on XAU= and have had this outlook for the last 55 periods.

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