News & Analysis at your fingertips.

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.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
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
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
Wall Street
Mixed
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
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
USD/JPY
Bullish
More View more
Real Time News
  • AUD/JPY IG Client Sentiment: Our data shows traders are now net-long AUD/JPY for the first time since Sep 16, 2020 11:00 GMT when AUD/JPY traded near 76.69. A contrarian view of crowd sentiment points to AUD/JPY weakness. https://www.dailyfx.com/sentiment https://t.co/ixxjaexZoP
  • The US Dollar is struggling against ASEAN currencies despite weakness in the S&P 500. Capital remains flowing into emerging markets, keeping USD under pressure, could this change? Find out from @ddubrovskyFX here:https://t.co/nwhy3XhE74 https://t.co/5S6AARA0DA
  • Gold prices is consolidating at US$ 1,868 - its 100-Day Simple Moving Average (SMA) line. Will it hold above this key support level? https://t.co/o0BM7ABeka
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.23% Gold: -0.07% Silver: -0.97% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/X6JBrsCCnF
  • While @IG_US Client Sentiment is offering a mixed outlook for the S&P 500 and #Dow Jones, these could be at risk to a turn lower based on multiple bearish technical warning signs. Get your market update from @ddubrovskyFX here:https://t.co/9kYnq6hH1f https://t.co/bLHDVvd44Q
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.15% 🇳🇿NZD: 0.11% 🇨🇦CAD: 0.06% 🇪🇺EUR: -0.01% 🇨🇭CHF: -0.01% 🇯🇵JPY: -0.07% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/p80ihot5KY
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.00%, while traders in EUR/GBP are at opposite extremes with 67.34%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/PHdbvQq8kU
  • Copper prices may continue to push higher despite a worrying surge in Covid-19 cases and the lack of progress in Congressional stimulus negotiations. Get your #copper market update from @DanielGMoss here:https://t.co/N2OW566nID https://t.co/VJfjTNDdZI
  • The US weekly jobless claim number came in at 870k, in line with expectations. This marked a 4th consecutive weekly reading below 1 million mark, but the rate of improvement in the jobs market appeared to have slowed recently. https://t.co/7pEUQk80C8
  • What is the outlook for financial markets ahead of the first presidential debate and how are Democratic nominee Joe Biden and President Donald Trump doing in the polls? Find out from @ZabelinDimitri here:https://t.co/QQwAZTxZFg https://t.co/MSOw9DeSxe
Gold Price Analysis: Risk-Reward Favours Large Bullish Reversal

Gold Price Analysis: Risk-Reward Favours Large Bullish Reversal

2018-08-06 10:41:00
Justin McQueen, Analyst
Share:

Gold Price Analysis and Talking Points:

  • Gold Failing to Receive a Much-Needed Boost
  • Chinese Intervention on Yuan Slide Signals Reversal in Gold
  • Gold Speculators Positioning Raises Prospect of Bullish Reversal

See our quarterly gold forecast to learn what will drive prices through mid-year!

Gold Failing to Receive a Much-Needed Boost

Gold prices have continued to remain on the backfoot amid the gains in the USD, which has received a boost from the pickup in US yields as the Federal Reserve looks to hike another two times this year. Marginal USD rise this morning has pushed the precious metal lower by 0.2% this morning. Alongside this, key technical resistance in the form of the descending trendline from the June 14th peak remains prominent. Eyes will be on a breakout with the RSI indicator sitting on the cusp of oversold territory, raising the risk of a reversal in the near term.

Chinese Intervention on Yuan Slide Signals Reversal in Gold

Over the past couple of months, the correlation between the Yuan and gold has seen a notable increase in the wake of the escalating trade spat between the US-China. Consequently, the slide in the Yuan has also coincided with the fall in gold prices. However, on Friday, the PBoC had finally intervened to curb the depreciation in the Yuan by raising the reserve requirement on FX forwards trading to 20%, which makes it more expensive to hold CNH short positions. In turn, this may signal that prices in gold have bottomed provided this policy action leads to an effective cap in the USDCNH rise.

Correlation between Yuan and Gold

Gold Price Analysis: Risk-Reward Favours Large Bullish Reversal

Source: Thomson Reuters

Gold Speculators Positioning Raises Prospect of Bullish Reversal

According to the latest CFTC data, hedge funds and money managers added 5k contracts to their net short position, making it the largest net short since 2006. This also surpasses the extreme short positioning seen at the backend of 2015, which later saw a $300/oz surge in the price over the following 7-months. Given the record short positioning in gold, this suggests that the precious metal is very close to a bottom and may be ripe for a reversal.

GOLD PRICE CHART: Daily Time-Frame (February-August 2018)

Gold Price Analysis: Risk-Reward Favours Large Bullish Reversal

Given that the price of gold has fallen near 11% since its peak in April, risk-reward is most definitely on the upside. While record net-short position provides us with a good indicator that we are on the verge of a break to the upside, it does not however, provide us with a good signal that the near term bottom has been reached. $1200/oz remains to be key support for the precious metal, while RSI indicators dipping in oversold terrirtory suggests the $1200 level may continue to hold for now.

Chart by IG

Gold Technical Levels

S1: $1204 (July 2017 Low)

S2: $1200

R1: $1215(Descending trendline from June)

R2: $1236

R3: $1250

GOLD TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

To contact Justin, email him at Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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

DISCLOSURES