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Gold (XAU) Plays a Waiting Game:

  • Gold (XAU) trading either side of important Fibonacci retracement.
  • US data and USDCNH moves likely to direct gold.

DailyFX Q2 Forecasts and Top 2019 Trading Opportunities.

Gold (XAU) Price Little Changed for Now

The price of gold is trading either side of the 61.8% Fibonacci retracement level at $1,287/oz. and needs an impulse to break the current market torpor. Overall, the market still seems biased to higher prices with gold trading above all three moving averages and now out of overbought territory, using the CCI indicator. There is also old horizontal support between $1,277/oz. and $1,281/oz. which should also act as a buffer to any sell-off. Below here, the 50% Fibonacci retracement level comes into play at $1,263/oz. Upside momentum should find resistance at the psychological level at $1,300/oz. before the recent monthly high at $1,304.5/oz.

In the near-term, gold traders will be likely watching moves in USDCNH which is currently trading at a near six-month high of 6.9450. While the correlation between gold and USDCNH has been broken recently, a weaker Chinese Yuan has weighed on the price of gold in the past and USDCNH moves, especially at its current lofty level, should be monitored carefully.

In what has been a quiet week for heavyweight US data, this afternoon sees the release of the Uni of Michigan Consumer Sentiment index which may well direct the US dollar going into the weekend. The sentiment index is expected to move higher in May to 97.5 from a prior reading of 97.2. The US dollar basket is currently moving slightly higher, mainly due to GBP and EUR weakness, and this may also dampen any upside gold move, especially if US data beats expectations.

DailyFX analyst Richard Dvorak will be covering the Uni of Michigan Data Live from 13.45 GMT today.

How to Trade Gold: Top Gold Trading Strategies and Tips

Gold (XAU) Daily Price Chart (August 2018 – May 17, 2019)

Gold Price Outlook Eyes US Data and Chinese Yuan Weakness

Trading the Gold-Silver Ratio: Strategies and Tips.

IG Client Sentiment data show that retail traders are 78.9% net-long gold, a bearish contrarian indicator. However, recent daily and weekly sentiment shifts give us a stronger bearish contrarian trading bias.

--- Written by Nick Cawley, Market Analyst

To contact Nick, email him at nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1