We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bullish
GBP/USD
Bullish
USD/JPY
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Bitcoin
Bullish
More View more
Real Time News
  • RT @bbclaurak: I'm told that's the advice from Cabinet Secretary - legal default is still leaving at end of this month, because they can't…
  • RT @bbclaurak: No 10 claims chances of no deal go up if Letwin passes - 'the govt will step up no deal preparations immediately as the risk…
  • RT @NSoames: I shall vote against The Letwin amendment and for the Deal
  • RT @Robert___Harris: On the eve of tomorrow’s rushed Commons vote I keep thinking of the journalist Phillip Knightley’s memo to the executi…
  • The $AUD has wilted as markets price in further rate cuts even as the OCR hovers at just 1%. Those cuts may come, but labor market strength may have to wane first. Get your market update from @DavidCottleFX here: https://t.co/h1Uvm8ogXh https://t.co/M1IP0jqh41
  • The inside bar pattern occurs regularly within the financial markets. Incorporating the inside bar strategy within a trading system can enhance a trader’s market analysis technique. Find out how you can use it from @WVenketas here: https://t.co/E3EWOYTYNw https://t.co/ZCT4pwc6nv
  • Greed has proven to be a hindrance more than assistance for traders. How does greed impact your trading? Find out from @RichardSnowFX here: https://t.co/aT8TZjlFqP https://t.co/C4vrTm69sE
  • Central bank independence has several advantages and disadvantages. Find out what they are in-depth with @MartinSEssex here: https://t.co/wVFXbbTxf1 https://t.co/WkwZK6wtzy
  • The $GBPUSD may be carving out a 4-year bearish candlestick pattern as the $EURGBP downtrend prolongs. GBP/JPY may rise but be wary of #Brexit risks clouding technical analysis. Get your GBP market update from @ddubrovskyFX here: https://t.co/wzV4fygKWe https://t.co/hpDmrh0LLo
  • Get your technical setups for the British Pound ahead of the key #Brexit vote in Parliament this weekend here $GBPUSD $EURGBP $GBPJPY - https://www.dailyfx.com/forex/technical/article/fx_technical_weekly/2019/10/19/GBPUSD-EURGBP-GBPJPY-Technical-Analysis-Amid-Brexit-Deal-Vote.html?CHID=9&QPID=917702 https://t.co/TBdvAY6GN2
Gold Price Edges Lower in Range as Gold Volatility Sinks

Gold Price Edges Lower in Range as Gold Volatility Sinks

2019-05-21 21:00:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Gold Price Talking Points:

  • The gold breakout during the first half of May has failed, with price returning back into the 1266.18 to 1288.58 range from April 15 to May 13.
  • After hitting a four-week high in early-May, gold implied volatility has quickly slumped back towards its all-time low.
  • Changes in retail traders positioning suggest that gold prices could still fall.

Looking for longer-term forecasts on Gold and Silver prices? Check out the DailyFX Trading Guides.

The return of uncertainty over the US-China trade war negotiations initially proved bullish for safe haven assets like the Japanese Yen and US Treasuries. But amid a return of US Dollar strength alongside the bid in safe havens, gold prices have been hobbled in recent days, effectively neutralizing bullion’s appeal during a time of risks seemingly rising everywhere around the globe.

Shortly after hitting an all-time low on May 3, GVZ, the measure of 1-month implied Gold volatility, rebounded to a four-week high as new developments in the US-China trade war spooked investors globally. While rising volatility is usually seen as a disconcerting development for prices, gold benefits from rising volatility: higher levels of uncertainty increase the safe haven appeal of gold.

GVZ (Gold Volatility) Technical Analysis: Daily Price Chart (May 2018 to May 2019) (Chart 1)

gold volatility, gold volatility technical analysis, gold volatility chart, gold volatility forecast, gvz, gvz chart

Keeping this relationship between gold prices and gold volatility in mind, the past few weeks have seen measures of gold volatility fall, and in turn, the appeal of Gold wane. GVZ peaked on May 13, and gold prices hit their monthly high the following day; as gold volatility has quickly slumped back towards its all-time low, the Gold price breakout from early-May has failed in turn.

Gold prices remain within the range carved out between 1266.18 and 1288.58 from April 15 to May 13 after having returned to said consolidation last week. Typically, when false breakouts occur, we see price return to the other side of the consolidation; we thus can’t rule out a further drop in gold prices towards the consolidation support - particularly if Gold volatility continues to head lower.

Gold Price Technical Analysis: Daily Chart (April 2018 to May 2019) (Chart 2)

gold price, gold technical analysis, gold chart, gold price forecast, gold price chart

In early-May, gold prices attempted to climb through four-week consolidation resistance above 1288.58, and for several days, it appeared that a bullish breakout was gathering pace; the downtrend from the February and March swing highs was temporarily broken as well.

Nevertheless, the gold price forecast is still neutral so long as the range is in place; the breakout is on hold for now. Should gold prices move above 1288.58, we would again be looking at topside break of the consolidation as well as the downtrend from the February and March 2019 highs, while, a drop below 1266.18 would constitute a downside break of the consolidation as well as the uptrend from the late-2018 swing lows.

IG Client Sentiment Index: Spot Gold Price Forecast (May 21, 2019) (Chart 3)

igcs, ig client sentiment index, igcs gold, gold price chart, gold price forecast, gold price technical analysis

Spot gold: Retail trader data shows 79.3% of traders are net-long with the ratio of traders long to short at 3.83 to 1. The number of traders net-long is 3.9% lower than yesterday and 11.2% higher from last week, while the number of traders net-short is 3.2% lower than yesterday and 26.5% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests spot gold prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed spot gold trading bias.

FX TRADING RESOURCES

Whether you are a new or experienced trader, DailyFX has multiple resources available to help you: an indicator for monitoring trader sentiment; quarterly trading forecasts; analytical and educational webinars held daily; trading guides to help you improve trading performance, and even one for those who are new to FX trading.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

To contact Christopher Vecchio, e-mail at cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

View our long-term forecasts with the DailyFX Trading Guides

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.