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
Oil - US Crude
Mixed
Wall Street
Bullish
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
Gold
Bullish
GBP/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
USD/JPY
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
More View more
Real Time News
  • LIVE IN 30 MIN: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267
  • Iranian Ambassador to China: "The US' unilateral sanctions on Iran will turn to genocide against Iran if the international community succumbs to US bullying" - Global Times That is some intense wording. Last thing markets need now is escalated geopolitical tensions.
  • China sets the Yuan reference rate vs #USD at 7.0477 (BBG)
  • South Korea coronavirus death toll rises by 6 to 158 following reports that the country had confirmed 78 more additional cases, bringing the total to 9,661 (BBG) #USDKRW #covid19
  • Currency Strategist,@PaulRobinsonFX is a Swing trader. What is your #tradingstyle? Take the quiz and let us know: https://t.co/LPBOcS0Vtd https://t.co/skDq5iLemR
  • Singapore MAS eases policy and reduced the currency band slope to zero. (BBG) Learn more about how to trade #USDSGD here - https://www.dailyfx.com/forex/fundamental/article/special_report/2019/09/03/The-Singapore-Dollar-and-MAS-What-is-SGD-and-How-to-Trade-it.html
  • Tune in to @IlyaSpivak 's #webinar at 10:00 PM ET/2:00 AM GMT for insight on the cross market weekly outlook. Register here: https://t.co/E213bTtq5C https://t.co/x0FHuNIsJ5
  • RT @JPan_IG: SINGAPORE CENBANK SAYS MAS WILL ADOPT A ZERO PERCENT PER ANNUM RATE OF APPRECIATION OF THE POLICY BAND STARTING AT THE PREVAIL…
  • Do you know how to properly Identify a double top formation? Double tops can enhance technical analysis when trading both forex or stocks, making the pattern highly versatile in nature. Learn more about the double top formation here: https://t.co/yF133btXFd https://t.co/rUp1G9zzxj
  • #SPX futures down over 1.5% too, echoing risk-off bias https://t.co/Z0n4L156tl
Gold Price Outlook: Are Gold Prices Still a Safe-Haven?

Gold Price Outlook: Are Gold Prices Still a Safe-Haven?

2020-03-17 10:05:00
Justin McQueen, Analyst
Share:

Gold Price Analysis and Talking Points

  • Gold Prices Losing its Safe-Haven Status?
  • COT shows that Investors Remain Bullish on the Precious Metal
  • Margin Calls Raise Short Term Risks for Gold

Gold Performance: In recent weeks, the price action in gold has caught many market participants off guard having fallen over 8%, while global equities have crashed. Therefore, raising doubts as to whether gold is an appropriate hedge for the rout in equities.

Gold BULLISH
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 1% 1% 1%
Weekly -6% 13% -2%
What does it mean for price action?
Get My Guide

Positioning: When looking at the recent CFTC positioning data, investors remain very bullish on the precious metal (21% net long adjusted for open interest), despite a slight pullback in gross longs. That said, short positions have also edged lower, that investors are not yet beginning to turn bearish on the precious metal (figure 1). Elsewhere, ETF holdings of gold (SPDR Gold ETF) have shown that investors have begun to unwind their positions, falling over 3% from its peak reached on March 9th.

Figure 1: Investors Continue to Hold Large Bullish Positions in Gold

Investors Remain Bullish on Gold

Margin Call: The pressure in gold prices can be attributed to margin call induced liquidation where investors would unwind their positions, they had built up in order to raise cash and offset their losses. This has been evident in gold where on February 28th the precious metal saw one of its largest intra-day falls since June 2013, while liquidations had also been touted for last week’s price action. Of note, Bank of America highlighted that investors had piled a record amount into cash-like assets, totaling $137bln through the week ending March 11th.

Gold Forecast
Gold Forecast
Recommended by Justin McQueen
Download our fresh Gold Forecast
Get My Guide

Financial Crisis: The current performance of gold is not out of the ordinary during these turbulent times, given that the precious metal had also sold during the 2008 crisis when equity markets saw sizeable double-digit losses. However, gold did outperform relative to the equities with pullbacks modest (figure 2).

Figure 2: Gold Also Dropped in the Global Financial, However, Outperformed Equities

Gold and S&P 500 During Financial Crisis

*The chart shows the performance of the gold and the S&P 500 during the financial crisis.

Monetary Stimulus: Despite the Federal Reserve slashing interest rates back to zero and announced QE4. The precious metal has failed to benefit; however, we are cognizant of the fact that it took two years into the recovery for gold prices to hit a record high of $1921 in 2011. As such, while there are risks of short-term dips in the precious metal, with the global economy likely to remain uncertain in the longer term we see risks remain skewed to the upside in gold. Alongside this, on the physical market, gold prices are at a double digit premium relative to paper trading and thus this supports the view that gold remains in high demand.

GOLD PRICE CHART: Weekly Time-Frame

Gold Price Outlook: Are Gold Prices Still a Safe-Haven?

Source: IG Charts

--- Written by Justin McQueen, Market Analyst

Follow Justin on Twitter @JMcQueenFX

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

DISCLOSURES

News & Analysis at your fingertips.