Gold Outlook:
- Gold nudges higher buoyed by USD weakness
- Price Action confined to trading range
- Golden cross provides hope for the bulls
Gold prices continue to trade sideways as US Dollar weakness works to buoy the precious metal but not enough to break the declining trendline which has prevailed since XAU/USD reached its peak in August. Delayed votes and sticking points in the fight for another coronavirus aid package in the United States have had modest impact thus far as investors look to the precious metal with mixed sentiment.
Gold Technical Analysis
Since reaching its peak in August, Gold continues to trade within confluent zones, highlighted by the Fibonacci retracement levels, with price action bouncing between support and resistance. However, the downward trajectory which has prevailed since August must still negotiate interest from bulls who are eager to push above the key psychological level of 1900.
Since rebounding off of the 50% retracement level at 1761, the crossover of the Moving Average Convergence/Divergence (MACD) below the zero line, provided a potential signal that bearish trend was losing steam and has since subsided, but now hovers on the zero-line until buyers or sellers can gain momentum.
Gold Daily Chart
Chart prepared by Tammy Da Costa, IG
Meanwhile, on the four hour chart, the descending trendline continues to hold bulls at bay, providing an additional barrier of resistance. However, the formation of a golden cross could be a potential signal that the short-term upward momentum may continue, provided resistance can be surpassed.
Gold 4 Hour Chart
Chart prepared by Tammy Da Costa, IG
Client Sentiment
Gold: Retail trader data shows 81.96% of traders are net-long with the ratio of traders long to short at 4.54 to 1. The number of traders net-long is 1.75% higher than yesterday and 3.10% higher from last week, while the number of traders net-short is 10.38% higher than yesterday and 5.23% higher from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall.
Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.
--- Written by Tammy Da Costa, Market Writer for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
https://www.dailyfx.com/us-dollar-index?ref-author=dacostahttps://www.dailyfx.com/education/moving-average-convergence-divergence/macd-crossover.html
