Gold 1 OZ (XAU=X) not surprising that gold ETFs have seen four straight months of net inflows

Gold 1 OZ (XAU=X) not surprising that gold ETFs have seen four straight months of net inflows


Gold 1 OZ (XAU=X) not surprising that gold ETFs have seen four straight months of net inflows

Wobbly stock prices are sending many panicked people running scared for gold, sending prices for the yellow metal soaring. Savvy investors should follow suit.

The World Gold Council recently reported that investors sank $3.1 billion into gold-backed exchange-traded funds for the second month in a row during January. That’s the fourth consecutive month of net inflows for gold ETFs, with the overwhelming majority of the cash coming from North America over the period.

These inflows helped lift bullion prices even as stock prices sank. The SPDR Gold Shares ETF, which hold bars of solid bullion and closely tracks prices on gold and gold futures, rallied 6.9% in the three months that ended on Thursday — a period that saw the S&P 500 retreat by 3.6%.

Why the Gold Fever?

Arthur Hogan, chief market strategist at New York City-based investment bank broker-dealer National Securities, says gold is rallying because “investor appetite for risk is reduced.”

He sees three reasons for that:

  • Geopolitical Risk. The U.S. trade war with China, the humanitarian crisis in Venezuela, and Britain’s planned Brexit from the European Union are three examples of this. Each raises uncertainty for investors about the future, and that tends to make them anxious.
  • High Stock Valuations. Investors are also increasingly wary of the stock market that’s pricey relative to projected earnings. So, some investors are cashing in at least part of their stock holdings and sending some of the proceeds to gold funds.
  • The Federal Reserve. Hogan says the Fed also seems to be at “an inflection point” when it comes to U.S. interest rates. He notes that the investment community went from expecting the Fed to boost rates multiple times this year to now perhaps making no increases in 2019. Lower interest rates tend to weaken the U.S. dollar and boost inflation risks, making gold more attractive. “When anything has a negative effect on the value of the dollar, then gold tends to do better,” Hogan says.

Overall, the bias in prices is: Upwards.

By the way, prices are vulnerable to a correction towards 1,273.74.

The projected upper bound is: 1,335.20.

The projected lower bound is: 1,296.40.

The projected closing price is: 1,315.80.

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 28 white candles and 22 black candles for a net of 6 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 34.9882. This is not an overbought or oversold reading. The last signal was a sell 4 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 63.06. 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 4 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 44. This is not a topping or bottoming area. The last signal was a sell 4 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 sell 1 period(s) ago.

Rex Takasugi – TD Profile

PREC.M.XAU= closed up 3.960 at 1,313.990. Volume was -0% below average (neutral) and Bollinger Bands were 23% wider than normal.

Open High Low Close Volume___
1,310.0701,315.6401,307.1501,313.990 0

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

Moving Averages: 10-period 50-period 200-period
Close: 1,313.01 1,276.94 1,245.54
Volatility: 8 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 5.5% 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 into XAU= (bullish). Our trend forecasting oscillators are currently bullish on XAU= and have had this outlook for the last 45 periods.

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