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Breaking news

U.S. Equities continue to get hit, Dow Jones now down more than 1,000 points

Gold Price Forecast: Gold Bulls Lacking Until Double Top is Cleared

Gold Price Forecast: Gold Bulls Lacking Until Double Top is Cleared

Justin McQueen, Strategist

Gold Price Analysis and News

  • Gold Subdued as Markets Await ISM and NFP
  • Close Above Double Top Needed for Bullish Excitement

Gold Subdued as Markets Await ISM and NFP

Price action in the precious metal is somewhat muted as market participants await key data releases in the form of ISM and NFP. While today’s ADP report will garner attention, the predictive value the data has for NFP has been even more tenuous in recent months. This was notable last month, where the two data points showed the biggest disparity in a year. However, the data does hold relevance for how markets may position themselves in anticipation of the NFP report.

ADP Link with NFP Even More Tenuous in Recent Months

Gold Price Forecast: Gold Bulls Lacking Until Double Top is Cleared

Close Above Double Top Needed for Bullish Excitement

That said, for the time being, gold continues to hover around its 200DMA (1810) and while dips to 1800 during yesterday’s session found support, it is difficult to be entirely convinced about further upside until a close above the double top at 1830-35 is made, particularly as momentum indicators (RSI) are once again stalling. Taking a look at 10yr real yields they are off the lows and thus approaching last months highs, a factor that is likely to keep the gold prices suppressed, despite the USD seeing a 1% pullback from its recent multi-month peak. Should the upcoming US employment statistics print on the soft side, gold can be expected to rise towards 1830-35. On the downside, support resides at 1770-75, while the key pivot resides at 1760, which is a level I have watched in the precious metal for the past year.

Gold Chart: Daily Time Frame

Gold Price Forecast: Gold Bulls Lacking Until Double Top is Cleared

Source: Refinitiv

IG Client Sentiment: Outlook Mixed

Retail trader data shows 70.52% of traders are net-long with the ratio of traders long to short at 2.39 to 1. The number of traders net-long is 0.37% higher than yesterday and 1.29% lower from last week, while the number of traders net-short is 2.93% higher than yesterday and 7.18% lower 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.

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.

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

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