Oil and Gold 1 OZ (XAU=X) prices rise amid US-Iran uncertainty
As geopolitical tensions mount between the U.S. and Iran, oil prices spiked on Monday and gold prices surged in response to the uncertainty.
U.S. officials confirmed Qassem Soleimani, the leader of Iran’s Quds Force, was killed late Thursday in a U.S. airstrike that targeted the convoy near Baghdad. In the wake of his death, Iranian leaders have vowed revenge. President Donald Trump responded to the threats of vengeance on Twitter, saying that the U.S. is prepared to “hit very fast and very hard” if Iran retaliates.
The uncertainty of whether Iran will respond has caused some volatility in global financial markets, though most were able to rebound slightly by midday Monday following steeper tumbles on Friday.
Meanwhile, all eyes are on oil and gold prices, which saw the spikes in the wake of the news. Here are what analysts and experts are watching as the turmoil in the Middle East impacts the prices of oil and gold.
Uncertainty in the Middle East has historically had a direct impact on oil prices around the world. In the aftermath of the news of the death of Soleimani, oil prices initially spiked by 3%.
Brent crude oil, the global benchmark, reached a 6-month high of more than $70 a barrel in the last few days.
Iran partially houses one of the world’s most important oil chokepoints, the Strait of Hormuz, which is located between Oman and Iran. Approximately 21 million barrels of oil per day, or 21% of global petroleum consumption, flow through the strait everyday, according to the U.S. Energy Information Administration.
The average gasoline price in the U.S. held steady Monday at $2.58 per gallon, the same price as a week ago, according to the American Automobile Association.
Gold prices, which have already been on the rise for the past few weeks, jumped because of escalating tensions in the Middle East, with some analysts predicting investors are turning to gold amid the turmoil.
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 1,504.68.
The projected upper bound is: 1,598.84.
The projected lower bound is: 1,545.61.
The projected closing price is: 1,572.22.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 1 black candles for a net of 7 white candles. During the past 50 bars, there have been 31 white candles and 18 black candles for a net of 13 white 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 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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 82.7665. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 3 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 86.08. 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 94 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 157.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 22 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 27 period(s) ago.
Rex Takasugi – TD Profile
PREC.M.XAU= closed up 4.701 at 1,570.560. Volume was 8,900% above average (trending) and Bollinger Bands were 115% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1,528.60 1,484.54 1,426.77
Volatility: 9 11 14
Volume: 8,469 1,694 423
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.
PREC.M.XAU= is currently 10.1% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume out of XAU= (bearish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 16 periods. Our momentum oscillator is currently indicating that XAU= is currently in an overbought condition.
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