Gold's doldrums temporarily hindering higher prices

30 thg 8

The XAUUSD trade remains bullish but currently faces resistance before the price can go up. The elements include:
- potential overpricing-in of the composite driver forces of interest rate cuts, longstanding geopolitical risks and general economic malaise in the major economies.
- technical indicators also giving little impetus for further buys at this level of prices.

The market might accepts some downwards correction. Why?

1. A regression trend analysis on the daily shows GOLD is currently trading high towards the channel's resistance with flatlining high of about $2,525 in this week we are closing. A week with key economic indicators going against Gold's allure.

$2,485 - $2,503 has become the support range (orange rectangle) after having left the long drawn $2,380 - $2,485 range (white rectangle) in the middle of August.

2. Whilst GOLD is trading at highs on the wide Bollinger bands, it seems riskier than a few weeks ago to take new long positions. In the last 7 trading days 3 tests of a mean reversion have occurred and a fourth will likely be successful in the absence of increased upside forces in the macro economic environment.

3. The MACD line is about to cross under the signal line. It has been 3weeks since it crossed over the signal line and is showing it will soon go under - rarely has it touched and sprung up again since April! + the histogram since the crossover has not shown higher buying intensity.

4. The RSI near 60 supports the idea of overpricing-in. With the price rise trend since the end of June when the resistance line of the ascending channel was tested, the RSI has failed to stay >70 for a significant period. Can be interpreted the market has already seen some buyers off!

5. The Stoch RSI meanwhile suggested GOLD was overbought since last week and no better day has come since 20 August when prices temporarily broke the resistance of a steeper channel that started around 8th August. That steeper channel (white paralle channel) has had its support broken today! The good thing for the Bulls is we are already nearing the Stoch RSI starting to push buyers back into the market.

6. The CCI shows Bulls are still in the arena but not causing as much upward havoc. That is where the suggestion for further price ascension come from.

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