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Gold Price Analysis and Talking Points:

  • Gold Prices Edging Lower Since FOMC, Eyes on NFP
  • Trade War Latest: Trump Looking at Additional Tariffs

See our quarterly gold forecast to learn what will drive prices throughout Q2!

Gold Prices Post Breakout of Downtrend from 2019 Peak

Gold prices continued to edge higher in the wake of the escalation of the US/China trade war with China announcing its retaliation (full story), which in turn saw the precious metal make a slight break above the psychological $1300 level, as we had noted last week (full story) persistent risk aversion was likely to underpin gold prices and potentially spark a breakout. This was indeed what happened as gold broke through the descending trendline from the 2019 peak at $1290. Topside resistance now situated at $1309-11, in which a break through raises the risk of a move towards the 76.4% Fibonacci retracement at $1317. However, failure to make a breach through topside resistance could see the precious metal make a return to $1290.

Trade War Latest: Trump Looking at Additional Tariffs

Overnight, the USTR office had posted details of tariffs on the approximate remaining $300bln of Chinese goods and will hold a public hearing on June 17th with President Trump stating that he had not made a decision whether to go ahead with tariffs on further Chinese goods. Of course, a further escalation could keep gold prices buoyed in the near-term.

IG Client Positioning | Clients Raises Net Long Gold Positioning

Trader data shows 72.4% of traders are net-long with the ratio of traders long to short at 2.62 to 1. The number of traders net-long is 4.3% lower than yesterday and 7.3% lower from last week, while the number of traders net-short is 6.6% lower than yesterday and 2.0% 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. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Spot Gold-bearish contrarian trading bias.

GOLD PRICE CHART: Daily Time-Frame (Nov 2017-May 2019)

Gold Prices Post Breakout of Downtrend from 2019 Peak

What You Need to Know About the Gold Market

GOLD TRADING RESOURCES:

--- Written by Justin McQueen, Market Analyst

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

Follow Justin on Twitter @JMcQueenFX