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Gold– Retail FX traders have sold aggressively into recent Gold price strength, and a contrarian view of crowd sentiment favors a XAU/USD rally onto fresh highs. It’s important to note that this isn’t the first time we’ve called for a breakout; the ‘crowd’ has turned decisively net-short gold prices at a handful of key XAU/USD tops in the past three months. And indeed there’s no way to know whether this is yet another instance in which traders turn short into market reversals.
A sustained shift towards selling would nonetheless keep us bullish, and a run towards yearly highs remains likely until the opposite occurs and crowds begin buying.
See next currency section: DAX - German DAX Likely to Hit Fresh Highs
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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