Gold, US Dollar (USD) Talking Points:
- Gold prices rise slightly after the number of reported US Covid-19 cases reaches a global record high of 1 Million
- Interest rate expectations and rising US treasury yields and a stronger US Dollar hold Bullion bulls at bay.
- Support and resistance levels currently remain at key technical levels for XAU/USD
Omicron Variant Pushes US Cases to a Record High, Risk Sentiment Weighs on Gold Prices
Gold prices have recovered a portion of yesterday’s losses as the rapid spread of the Omicron variant limits losses. With the US reporting a global record high of 1 million cases, rising inflation and potential restrictions to curb the spread of the latest variant allowed the precious metal to use its safe-haven appeal to limit losses, at least temporarily.
However, despite rising cases, inflationary pressures and expected rate hikes from the Fed (Federal Reserve) have recently supported both US treasury yields and the US Dollar which continue to weigh on the Bullion.
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Gold Price Analysis
Since peaking in August 2020, Gold bears have dominated the bearish trend which currently remains intact.
Although fundamental factors remain prime catalysts for risk sentiment, key Fibonacci levels of both the 2020 and 2021 move continue to provide support and resistance for both the short and medium-term move.
Gold (XAU/USD) Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
Meanwhile on the daily time-frame, price action remains below the channel formation as bulls struggle to rise above the 50-day moving average (MA), around the critical psychological level of $1,800.
Gold (XAU/USD) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
Gold (XAU/USD) Sentiment
Gold: At the time of writing, retail trader data shows 81.52% of traders are net-long with the ratio of traders long to short at 4.41 to 1. The number of traders net-long is 20.28% higher than yesterday and 7.49% higher from last week, while the number of traders net-short is 33.23% lower than yesterday and 18.75% 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 | -7% | 9% | 0% |
| Weekly | -7% | 18% | 4% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
