GOLD: Bullish Momentum Has Dried Up
* Gold continued to trade in tight ranges today in Asia, giving back much of the overnight gains. * Currently down -0.33% at US$4,346 - gold remains wedged between the converged 20-day / 100-day EMA and the 50-day EMA. * When moving averages converge it shows that price range contraction is occurring. Volatility is dropping, and the asset is compressing into a tight equilibrium. In markets, periods of low volatility are almost always followed by an explosive breakout. Short-term prices are dropping faster than the long-term averages-proving that the bullish momentum has likely dried up. * This leaves gold even more sensitive to changes in interest rate expectations. The FED's next decision is October 29 and currently, the market has a 50% probability of a rate hike priced in. Watch as this pricing evolves for guidance on gold's direction. Should markets become more hawkish, gold could trade back down towards $4,200. * For now, it looks likely more tight ranges for bullion into the end of this week. Fig 1: Gold Stuck in Tight Technicals FInance LP / MNI
* Gold continued to trade in tight ranges today in Asia, giving back much of the overnight gains. 33% at US$4,346 - gold remains wedged between the converged 20-day / 100-day EMA and the 50-day EMA. * When moving averages converge it shows that price range contraction is occurring. Volatility is dropping, and the asset is compressing into a tight equilibrium.
In markets, periods of low volatility are almost always followed by an explosive breakout. Short-term prices are dropping faster than the long-term averages-proving that the bullish momentum has likely dried up. * This leaves gold even more sensitive to changes in interest rate expectations. The FED's next decision is October 29 and currently, the market has a 50% probability of a rate hike priced in.
Watch as this pricing evolves for guidance on gold's direction. Should markets become more hawkish, gold could trade back down towards $4,200. * For now, it looks likely more tight ranges for bullion into the end of this week. Fig 1: Gold Stuck in Tight Technicals FInance LP / MNI