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Gold Price Setup: Bullion bulls lead the way, XAU/USD Levels

Gold Price Setup: Bullion bulls lead the way, XAU/USD Levels

Tammy Da Costa, Analyst

Gold, US Dollar (USD) Talking Points:

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.

Gold Price Setup: Bullion bulls lead the way, XAU/USD Levels

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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

Gold 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

Gold Daily Chart

Chart prepared by Tammy Da Costa using TradingView

Gold (XAU/USD) Sentiment

Gold Price Setup: Bullion bulls lead the way, XAU/USD Levels

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.

--- Written by Tammy Da Costa, Analyst for DailyFX.com

Contact and follow Tammy on Twitter: @Tams707

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

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