Gold Price Analysis: Precious Metal Struggles, Breakout Looms
Gold Price, News and Analysis
- Gold mired below $1,200/oz. as technical remain negative.
- Retail traders remain heavily long of gold despite the recent sell-off.
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Gold’s Trading Range Contracts, Breakout on the Cards
Gold has remained in a $25/oz. trading range for the last 3 weeks, and below $1,200/oz. in the last three days, as the precious metal finds any upside break unsustainable. With the US dollar, the Swiss Franc and the Japanese Yen taking all the risk-off trade, gold is left at the mercy of a strong dollar and increasing US interest rates.The recent narrowing of the trading range also points to a breakout on the horizon with the downside looking more likely. The downtrend on the daily chart, below, remains in place and a fresh attempt on the $1,160/oz. August 16 low remains likely. The precious metal needs to break and close above $1,216/oz. to regain any bullish momentum.
Gold Daily Price Chart (January - September 11, 2018)
The latest IG Retail Sentiment Indicatorshows that traders remain 83.6% net-long of the precious metal,a bearish contrarian sentiment indicator. In addition, the latest CFTC Commitment of Traders report show that large US dollar bullish bets remain intact – gold negative – while large speculators are still running a substantial net-short gold position.
Gold and Silver Go Their Separate Ways.
The relationship between gold and silver has broken further with the ration between the two metals now heading towards its widest in over 25 years. With silver now looking extremely cheap against gold, the latter will struggle to rally heavily if the commodity space turns positive.
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--- Written by Nick Cawley, Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.