- Gold continues to respect support and resistance.
- Fundamental drivers may challenge the status quo.
- Mixed message from retail trader data.
Gold remains rangebound between two important Fibonacci retracement levels produced from the March 16 2020 low at $1,451/oz. and the August 6, 2020 high at $2,075/oz. Resistance at $1.837/oz. has held two recent breakout attempts while support at $1,764/oz. has been untroubled of late. Adding to the current stalemate, all three simple moving averages are now clustered together, giving little away as to the current sentiment in the market, while the CCI indicator is neutral. Inside this box, there is additional support around $1,785/oz. which is underpinning the short-term gold price. It will need a fundamental driver to break this current set up otherwise price action will remain constrained going into the summer lull.
The US dollar continues to tread water ahead of this Friday’s US jobs report, a monthly event that is closely watched by traders who continue to double guess the Fed’s next move. While the inflation outlook – transitory or not – has been the main driver of the US dollar over the last few months, Fed chair Powell recently reiterated the central bank’s dual mandate of inflation and jobs, bringing this month’s jobs report firmly into focus. Friday’s job’s release may well be the driver that gold needs to attempt a range breakout.
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Gold Daily Price Chart (June 2020 – August 3, 2021)
Retail trader data shows 81.72% of traders are net-long with the ratio of traders long to short at 4.47 to 1.The number of traders net-long is 3.32% higher than yesterday and 6.97% lower from last week, while the number of traders net-short is 0.50% lower than yesterday and 1.43% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.
What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.