Gold (XAU/USD) Analysis, Price and Chart
- Gold confined in a narrowing trading range.
- Volatility on the wane.
- Retail traders remain heavily long of the precious metal.
Gold has had a quiet few days of late with price action contained within a short- to medium-term trading range. The precious metal needs a fundamental driver to break this range and with the US presidential elections on the horizon, a breakout may soon happen. The direction of the break is slightly harder to work out, although the current weakness of the US dollar is underpinning the price of gold, along with a jittery equity space, as Q3 earnings start to reveal the full impact of the coronavirus on various sectors. In addition, the record spread of the coronavirus in the US, Russia, and parts of Europe will add to the risk-off tone in the market.
The technical picture is slightly more cloudy with medium-term lower highs converging with short-term higher lows, indicating a break is near. Two moving averages seem to be capping upside movement this week with the 20-day simple moving average holding sway around $1,905/oz. followed by the 50-dma at $1,915.5/oz. Above here, the next level of resistance is the 23.6% Fibonacci retracement at $1,928/oz. Initial support for gold is between $1,890/oz. and $1,880/oz.
Gold Daily Price Chart (March – October 27, 2020)
| Change in | Longs | Shorts | OI |
| Daily | 1% | -3% | -1% |
| Weekly | 2% | -8% | -2% |
IG retail trader datashow 79.89% of traders are net-long with the ratio of traders long to short at 3.97 to 1, a contrarian bearish signal. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price may soon reverse higher despite the fact traders remain net-long.
What is your view on Gold – are you bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
