Gold, US Dollar (USD) Talking Points:
- Gold prices extend gains, US Dollar shifts focus to the Fed
- Interest rate expectations and rising inflation boosts Bullion
- XAU/USD tests trendline resistance. Will Gold, Silver and other safe-haven assets climb higher?
Risk off sentiment boosts safe-haven Gold
Gold prices have held onto recent gains as investors reduced their appetite for risk. With rising tensions between Russia and the Ukraine, geopolitical risks and the upcoming Fed meeting allowed the precious metal to resume a move towards trendline resistance.
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Gold Price Analysis
With gold prices now trading around the 38.2% Fibonacci retracement level of the 2020 move at $1,840, a break above trendline resistance could see prices move closer to the next Fibonacci resistance level of $1,852, the 61.8% retracement of the 2021 move.
Although the trend remains supported by fundamentals, the Fed meeting and potential rate hikes could jeopardize Gold’s bullish move if markets expect the Fed to adopt a more aggressive path to tackle rising inflation.
Gold (XAU/USD) Weekly Chart
Chart prepared by Tammy Da Costa using TradingView
Meanwhile, the above-mentioned levels have formed a zone of confluency between these support and resistance levels as the CCI (Commodity Channel Index) climbs into overbought territory on the daily chart.
Gold (XAU/USD) Daily Chart
Chart prepared by Tammy Da Costa using TradingView
Gold (XAU/USD) Sentiment
Gold: Retail trader data shows 70.35% of traders are net-long with the ratio of traders long to short at 2.37 to 1. The number of traders net-long is 5.30% higher than yesterday and 1.33% higher from last week, while the number of traders net-short is 11.82% higher than yesterday and 8.01% 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.
| Change in | Longs | Shorts | OI |
| Daily | -4% | 18% | 2% |
| Weekly | 0% | -5% | -2% |
--- Written by Tammy Da Costa, Analyst for DailyFX.com
Contact and follow Tammy on Twitter: @Tams707
