Gold Talking Points:
- Gold Prices lose steam below key psychological resistance
- US Dollar strength weighs on precious metals
- Can equities hold gains into 2022?
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Gold Prices Underpinned by Stronger US Dollar
Gold prices are currently testing a critical level of support and resistance after bulls surrendered a portion of their gains to a stronger USD.
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Despite a rise in both geopolitical tensions and inflationary pressures, stocks have recently climbed higher, enabling bulls trading equities to hold onto the upward trajectory that has persisted throughout the year.
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Gold Technical Analysis
After peaking in August 2020, Gold prices have since declined, forming a wall of resistance above the key psychological level of $1,800.
Over the past three weeks, Gold bulls have managed to regain temporary control over the systemic, prominent trend in an effort to drive prices back towards the 38.2% Fibonacci retracement of the 2020 move, currently providing additional resistance at $1,835.
Gold Weekly Chart
![](https://a.c-dn.net/b/4iIvGd/Gold-Price-Outlook-XAU-Surrenders-to-a-Stronger-Dollar-Stocks-Rise_body_A_screenshot_of_a_computerDescription_automatically_generated_with_medium_confid.png)
Chart prepared by Tammy Da Costa using TradingView
Meanwhile on the daily time-frame, price action remains encapsulated between the key Fibonacci levels of the 2021 move. This zone of confluency has continued to provide both support and resistance for the safe-haven metal between the levels of $1,786 and $1,820 respectively.
As prices trade sideways into the new year, the CCI (commodity channel index) continues to threaten oversold territory while the 50-day moving average (MA) provides additional support at the $1,800 handle.
Gold Daily Chart
![](https://a.c-dn.net/b/2g2AmQ/Gold-Price-Outlook-XAU-Surrenders-to-a-Stronger-Dollar-Stocks-Rise_body_Graphical_user_interface.png)
Chart prepared by Tammy Da Costa using TradingView
Gold Sentiment
![](https://a.c-dn.net/b/2CN493/Gold-Price-Outlook-XAU-Surrenders-to-a-Stronger-Dollar-Stocks-Rise_body_ChartDescription_automatically_generated.png)
Gold: At the time of writing, retail trader data shows 79.19% of traders are net-long with the ratio of traders long to short at 3.81 to 1. The number of traders net-long is 2.17% higher than yesterday and 3.48% lower from last week, while the number of traders net-short is 2.28% lower than yesterday and 10.73% 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.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.
Change in | Longs | Shorts | OI |
Daily | 1% | -3% | -1% |
Weekly | 2% | -8% | -2% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707