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
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
Bullish
Gold
Mixed
Oil - US Crude
Mixed
Bitcoin
Bearish
More View more
Real Time News
  • The $SGD is driven by the Monetary Authority of Singapore, which manages exchange rate instead of short-term interest rates. Learn more on the $SGD and how to trade it from @ddubrovskyFX here: https://t.co/eWLM9XZs5Y https://t.co/PyWV2maVHY
  • RT @bbands: If you are based in Chicago, I'll be joining @IG_US on October 28th for a talk on applications of Bollinger Bands in forex. Com…
  • As expected, sentiment couldn't find much follow-through after the conclusion of US-China Phase 1 talks last week. The MSCI #EmergingMarkets Index is off to an eerie familiar decline saw after the US-China #G20 trade truce back in June - https://t.co/fTs63TY1LB https://t.co/revJYXI2HX
  • List of countries engaged in a trade war (or may be entering a trade tiff) US-EU 🇺🇸🇪🇺 US-China🇺🇸🇨🇳 India-Brazil🇮🇳🇧🇷 Malaysia-India🇲🇾🇮🇳 South Korea-Japan🇰🇷🇯🇵
  • List of countries engaged in a trade war (or are may enter a trade tiff) US-EU 🇺🇸🇪🇺 US-China🇺🇸🇨🇳 India-Brazil🇮🇳🇧🇷 Malaysia-India🇲🇾🇮🇳 South Korea-Japan🇰🇷🇯🇵
  • With increasing volatility in weather patterns, how might storms, hurricanes, and floods rattle the supply chain for petroleum-based products and impact crude #oil prices? Find out from @ZabelinDimitri here: https://t.co/e91RRyBQ3z #OOTT https://t.co/6QHLYqPz7B
  • Hello there, traders! In case you missed my webinar "Geopolitical Risks Affecting Markets in the Week Ahead", check out the recording below: https://t.co/uSaDQDLcWd Themes and assets included #EURGBP #Brexit #USDollar #USDKRW #Tradewars and more
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇯🇵JPY: 0.04% 🇨🇭CHF: -0.06% 🇪🇺EUR: -0.11% 🇨🇦CAD: -0.29% 🇬🇧GBP: -0.36% 🇳🇿NZD: -0.64% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/78d49uHr5P
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Silver: 0.47% Gold: 0.25% Oil - US Crude: -0.16% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/ctGPPWY4Dx
  • $AUDNZD: High beta currencies are notably weaker this morning as risk sentiment continues to ease with equity markets slightly softer. Get your market update from @JMcQueenFX here:https://t.co/ofNdYslQnz https://t.co/PBaj83dfx3
Gold Price Rebound Fueled by Less-Hawkish Chairman Powell

Gold Price Rebound Fueled by Less-Hawkish Chairman Powell

2018-08-24 16:14:00
David Song, Currency Strategist
Share:

Gold Talking Points

Gold prices appear to be on their way to test the August-high ($1225) even as Federal Reserve pledges to further normalize monetary policy, and the precious metal may stage a larger recovery over the remainder of the month as the bearish momentum unravels.

Image of daily change for major currencies

Gold Price Rebound Fueled by Less-Hawkish Chairman Powell

Image of daily change for gold prices

Recent remarks coming out of the Fed have failed to prop up the U.S. dollar, with bullion climbing to fresh weekly highs, and the inverse relationship between gold and the greenback may continue to take shape over the near-term as the central bank sticks to its hiking-cycle.

It seems as though the Federal Open Market Committee (FOMC) has little to no intention of deviating from its current course as the meeting minutes notes thatit would likely soon be appropriate to take another step in removing policy accommodation,’ and the central bank may continue to prepare U.S. households and businesses for higher borrowing-costs as ‘policymakers viewed the recent data as indicating that the outlook for the economy was evolving about as they had expected.

Image of Fed Fund Futures

Moreover, Fed Fund Futures continue to reflect expectations for four rate-hikes in 2018, with market participants gearing up for a move in September and December, but comments from Chairman Jerome Powell appear to have rattled bets for an extended hiking-cycle as the central bank head strikes a more balanced tone at the Fed Economic Symposium in Jackson Hole, Wyoming. During his speech, Chairman Powell talked down the risk for above-target inflation as ‘there does not seem to be an elevated risk of overheating,’ with the central bank head spending zero time to boost the credibility of the FOMC even as U.S. President Donald Trump continues to speak on monetary policy.

Image of IG client sentiment

With that said, the reaction to the Powell speech may keep gold prices afloat over the coming days, but the IG Client Sentiment Report continues to show retail sentiment near extremes as 80.0% of traders are net-long, with the ratio of traders long to short at 4.0 to 1. Even though the percentage of traders net-long is now the lowest since June 5, when it traded near $1296, the number of traders net-long is just 1.5% lower than yesterday and 3.3% lower from last week, while the number of traders net-short is 14.4% higher than yesterday and 32.7% higher from last week.

The rise in net-shorts appears to be spurring a shift in the IG Client Sentiment reading for gold, but the ongoing slant in retail positioning offers a contrarian view to crowd sentiment, with the broader outlook for gold still tilted to the downside as it preserves the downward trend from earlier this year. However, recent developments in the Relative Strength Index (RSI) warn of a larger recovery as it snaps the bearish formation from late-March, with topside targets still on the radar as the rebound from the yearly-low ($1160) appears to be gathering pace.

Gold Daily Chart

Image of gold daily chart
  • Recent price action warns of a larger recovery as gold climbs back above the former-support zone around $1198 (38.2% expansion), with a closing price above the stated region raising the risk for a move towards $1211 (50% retracement) to $1219 (61.8% retracement).
  • The August-high ($1225) comes up next followed by the Fibonacci overlap around $1246 (23.6% expansion) to $1249 (38.2% retracement).

For more in-depth analysis, check out the Q3 Forecast for Gold

Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES

News & Analysis at your fingertips.