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
Bearish
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
Oil - US Crude
Mixed
Wall Street
Bearish
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
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
GBP/USD
Mixed
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
More View more
Real Time News
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 1.81% Gold: 0.37% Silver: -0.36% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/tCzfLiJU9V
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.35%, while traders in US 500 are at opposite extremes with 67.31%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/gifjQE3Pk8
  • Germany affirmed 'AAA/A-1+', outlook stable by S&P - BBG
  • Indices Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Germany 30: 0.09% US 500: -0.02% Wall Street: -0.02% France 40: -0.25% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/7j8XbhvJFw
  • Trump: - Energy Secretary should look for other places to store oil - BBG
  • $GBPUSD finds resistance after crossing back below 1.2300 this morning https://t.co/QukmSLfko3
  • My portfolio is now up %600 https://t.co/Tb4Hz3zAyS
  • Canadian Dollar Price Outlook: USD/CAD Coils After Loonie Breakdown https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2020/04/03/Canadian-Dollar-Price-Outlook-USD-CAD-Coils-Loonie-Digests-JS-US-to-Canadian-Dollar-Forecast.html https://t.co/4Yix4ZEXeH
  • President Trump says he is looking at infrastructure package, "will do it soon" Surely a key theme to watch in the week ahead for $SPX
  • Trump says looking at infrastructure stimulus $DXY
Gold Price Outlook: XAU Continues to Tank, Nears Seven Month Lows

Gold Price Outlook: XAU Continues to Tank, Nears Seven Month Lows

2020-03-19 19:45:00
James Stanley, Strategist
Share:

Gold, XAU Price Analysis

  • Gold prices have had a tough past ten days, falling from above 1700 down to 1451, totally a loss of almost 15% in less than two weeks.
  • While Gold is often considered a safe-haven, in extreme scenarios of panic, cash often takes preference, as has been seen since the seven-year-high was set on March 9th.
  • Gold is now nearing a key zone of support. Global governments have launched massive bazookas. Will Gold bulls respond by hitting the bid?

Gold Crushed as Dash for Cash Dominates Global Markets

Gold is often considered a safe-haven asset; something that can benefit during times of stress or panic as investors duck for cover. This isn’t always the case, however, as can be evidenced from what took place in March of 2008 into October of the same year. March of 2008, of course, is when Bear Stearns went bankrupt; and this was followed by Lehman in September. Shortly after that, the government got to work with TARP passing through Congress and then the Fed getting to work with QE.

The next three years brought a massive bullish trend as Gold prices moved-up from an October 2008 low of 681.75 up to a 2011 high of 1920. But – when the panic was at its highest, as Bear Stearns and Lehman were getting hit – Gold prices softened by more than 33.9%.

Gold Monthly Price Chart: Nearly 34% Drawdown During Depth of Financial Collapse

Gold Monthly Price Chart

Chart prepared by James Stanley; Gold on Tradingview

This highlights how deflationary backdrops, particularly panic-prone scenarios can see a flight-to-quality that not only ignores Gold but treats it in a very bearish manner. This would appear to be what’s taken place over the past few week as Gold prices have cratered from a seven-year-high above 1700 to a multi-month low around the 1450 level. Gold prices are fast approaching a batch of support that had come into play of August of last year. This is around the 1447 level, which is the 38.2% retracement of the post-Financial Collapse major move, spanning the 2008 low up to the 2011 high.

Building Confidence in Trading
Building Confidence in Trading
Recommended by James Stanley
Building Confidence in Trading
Get My Guide

Gold Weekly Price Chart

Gold Weekly Price Chart

Chart prepared by James Stanley; Gold on Tradingview

Taking on a shorter-term look at the near-term scenario, and Gold prices have quickly moved from an overbought state to a near-oversold state on the daily chart. And a big difference here from the above mention of 2008: In that prior scenario it took the fall of Lehman to really kick the Federal Government into gear. This time – both Congress and the Fed wasted little time in attempting to address the worry enveloping markets. It just, hasn’t yet ‘worked,’ as was looked at in today’s webinar.

Gold MIXED
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 1% 1% 1%
Weekly 14% 16% 14%
Current Retail Sentiment in Gold
Get My Guide

But, aligning the backdrop and considering the compendium of facts can make the long side of Gold as potentially attractive; especially for those that are looking for a bit of pressure release in the US Dollar after a massive run of strength there. This would be a reversal scenario given the gravity of the recent sell-off, so traders would likely want to proceed with caution considering the counter-trend nature of such a setup. Resistance potential exists at the 1500 psychological level followed by the 1528 Fibonacci level. Below current support around the Fibonacci level lodged at 1447.57, deeper support interest may show around the 1400 area, which had previously provided a bit of support as the bullish trend was building in August of last year.

Gold Daily Price Chart

Gold Daily Price Chart

Chart prepared by James Stanley; Gold on Tradingview

--- Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX

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

DISCLOSURES

News & Analysis at your fingertips.