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
Mixed
GBP/USD
Bullish
USD/JPY
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
Gold
Bullish
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • As we head into next week, Cable is continuing to digest the massive leg higher last month, which at some point soon could mean another surge. Get your $GBPUSD technical analysis from @PaulRobinsonFX here: https://t.co/LJ42YhDe3X https://t.co/5hGwhGBpLB
  • Asia’s vast and growing importance to the world economy is not yet matched by the presence of a currency trading center to rival the established order. Get your update on market drivers in Asia from @DavidCottleFX here: https://t.co/E2hqoRdO7q https://t.co/urMnUCq4fn
  • RT @markets: White-hot pot stocks have flamed out in spectacular fashion https://t.co/3GsVsRyZaZ
  • What is the best time to trade #forex? Find out: https://t.co/M9R46r5ewa #tradingstyle https://t.co/gJ1QDrox67
  • #Gold prices may be given a tailwind from the FOMC minutes and escalating trade war risks if they fuel demand for anti-fiat assets amid expectations of additional Fed easing. Get your $XAUUSD market update from @ZabelinDimitri here: https://t.co/OJ7WUY9W7E $gld https://t.co/kBp3opzptm
  • Why should you set trading goals? How can it help regardless of what your #tradingstyle is? Find out: https://t.co/AYdD7ODlv1 https://t.co/G0ftVurNNN
  • Manning the penalty box today...i hope there aren't too many visitors https://t.co/1y81Li7laL
  • Do you think your #tradingstyle is of a #FOMO trader? Find out how you can turn that to #JOMO? Find out: https://t.co/79Q4pYdVEd https://t.co/S82AOd5AeP
  • What are the truths and lies of #forex trading regardless of your #tradingstyle here: https://t.co/uF75VPzstr https://t.co/xJ808KvLxr
  • RT @PaulMDomenick: “But Paul, I don’t have a mentor!! Really? •Do you have YouTube? You have a mentor! •Do you have a bookstore? You hav…
Gold Prices Continue to Coil as Range Breakout Lingers

Gold Prices Continue to Coil as Range Breakout Lingers

2019-05-30 17:15:00
Christopher Vecchio, CFA, Sr. Currency Strategist
Share:

Gold Price Talking Points:

  • Gold 1-month implied volatility hit a fresh all-time closing low yesterday, but the fact that Gold prices haven’t dropped any lower may be a good omen.
  • Since the gold price breakout in mid-May failed, price has remained into the 1266.18 to 1288.58 range from first entered on April 15.
  • Changes in retail trader positioning suggest that Gold prices may turn higher yet.

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

Global risk assets are taking a hit again on Thursday, with US equity markets making little progress after the open while crude oil prices declined in line with a drop with US Treasury yields. The persistent drumbeat of the US-China trade war has made for a difficult investing and trading environment in the near-term, given the propensity for information to emerge seemingly at random with no rhyme or reason.

One asset that has made little sense to market participants in recent weeks has been gold. Rising uncertainty around the US-China trade war negotiations has proved bullish for safe haven assets like the Japanese Yen and US Treasuries, but amid a return of US Dollar strength has effectively neutralizing bullion’s safe haven appeal (at least in USD-terms).

In thinking about gold’s role as a safe haven asset, recall the recent relationship between gold prices and gold volatility: GVZ peaked on May 13, and gold prices hit their monthly high the following day; as gold volatility dropped back towards its all-time low, the gold price breakout from earlier this month failed.

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

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

But a curious development has happened in recent days: despite Gold 1-month implied volatility (as measured by GVZ) hitting a fresh all-time closing low yesterday, May 29, Gold prices have not followed suit and turned lower themselves. Whereas rising volatility is usually seen as a disconcerting development for asset prices in general, Gold benefits from rising volatility: higher levels of uncertainty increase the safe haven appeal of Gold.

If gold prices are going to hold up in the face of declining gold volatility, then it stands to reason that gold prices may be finding a base themselves. Having remained in the former range carved out between 1266.18 and 1288.58 from April 15 to May 13, gold prices may be coiling for a move higher yet.

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

As the gold price coil continues, the near-term forecast is neutral; the breakout lingers but is not in play yet. It thus still holds that, 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 30, 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 78.7% of traders are net-long with the ratio of traders long to short at 3.69 to 1. The number of traders net-long is 0.4% lower than yesterday and 9.0% lower from last week, while the number of traders net-short is 4.2% higher than yesterday and 5.2% higher 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. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current spot gold price trend may soon reverse higher despite the fact traders remain net-long.

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.