Gold (XAU/USD) Analysis, Price and Chart
- Gold nears moving average resistance.
- Monday’s bear candle will likely trap gold’s price action.
- Client sentiment is mixed despite clients being heavily long.
Gold had a sharp turn for the worse on Monday, selling off by around $100/oz. at one stage as positive
coronavirus vaccine news hit the wires. Coming on top of a Joe Biden victory in the US presidential elections,
investors dumped traditional safe-haven markets and piled into riskier assets. This sharp sell-off produced a
large bear candle on Monday which is likely to constrain price action in the short- to medium-term. While
today’s candle is mildly positive, after breaking a four-day series of lower highs, gold is struggling to make a decent move, in either direction.
Up ahead, the 20- and 50- day simple moving averages converge just above the $1,900/oz. mark. Above here
a cluster of recent highs will slow price action down as gold approaches the 23.6% fib retracement at
$1,928/oz. It may prove difficult in the short-term for gold to break above here. There is likely reasonably s/t
support either side of $1,850/oz. from recent low prints, before 38.2% fib at $1,836/oz. and the 200-day sma
at $1,824/oz.
While the chart continues to show a neutral bias, as it currently is, Monday’s $1,850 -$1,964/oz. candle will
hold sway over any price movement. Indeed it may well hold running into the end of the year.
Gold Daily Price Chart (March – November 13, 2020)
| Change in | Longs | Shorts | OI |
| Daily | 4% | 10% | 7% |
| Weekly | -13% | 30% | 2% |
IG retail trader datashow 84.04% of traders are net-long of gold. We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.
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.
