News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
EUR/USD
Bullish
Oil - US Crude
Bearish
Wall Street
Mixed
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bullish
More View more
Real Time News
  • Use this technical analysis pattern recognition skills test to sharpen your knowledge: https://t.co/Qgz89PTxnu https://t.co/H9fW9ewiQd
  • Get your snapshot update of the of market open and closing times for each major trading hub around the globe here: https://t.co/BgZLFljIhZ https://t.co/yLt0ldtMsV
  • What suits your style of trading stocks or commodities? Find out what are the differences in these two markets here: https://t.co/BnA07cMV0s https://t.co/ZwwuTzTeac
  • What's the difference between leading and lagging indicators? Find out from here: https://t.co/vGx8HCagF5 https://t.co/4DGXwA8vqs
  • Struggling to define key levels? Floor-Trader Pivots assist traders in identifying areas in a chart where price is likely to approach and can be used to set appropriate targets, while effectively managing risk. Learn how to use this indicator here: https://t.co/Ye4m1FMKUW https://t.co/mAMhWbV6Jy
  • Make smart trading decisions with your free guide to trade the news. Download your free guide here.https://t.co/pb5E2KgRzW #DailyFXGuides https://t.co/E9ZmJvqO0z
  • Currency exchange rates are impacted by several factors. Are different world leaders a contributing factor? Find out here: https://t.co/4jsORznRTE https://t.co/fqxw1AoKc1
  • Gold snapped a two-week losing streak but keeps price within the broader August downtrend. These are the levels that matter on the $XAUUSD weekly chart. Get your market update from @MBForex here: https://t.co/B3Jct6mIBD https://t.co/xTGIM2hRBv
  • $GBPUSD continues to move higher, despite Friday’s weakness, as vaccination hopes continue to fuel positive sentiment despite ongoing lockdown fears and downbeat UK data. Get your market update from @nickcawley1 here: https://t.co/S8UoHzOwFN https://t.co/qI6UZdggvM
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/6wxX6oQurn
Gold Prices: Market Positioning Highly Unfavorable for Longs

Gold Prices: Market Positioning Highly Unfavorable for Longs

Paul Robinson, Strategist

What’s inside:

  • Record speculative longs in gold futures
  • The extreme has been mounting while price action has made no headway, something has to give
  • Bias is lower until market positioning normalizes

Gold has been a difficult market to get a handle on the past couple of months given the indecisiveness in its price action. The chop-fest following the spike high in February was to be expected given how quickly it had risen from December up until that point.

During the sideways period many had viewed as a bullish consolidation (self-included), a disturbing development was underway. Speculators (hedge funds, trend followers) have been piling into gold futures at a pace which pushed their net long position to the highest levels on record. (Jamie Saettele went over this on Monday.)

Typically, in the past when gold has undergone a corrective phase following a large move, market positioning would back off, allowing for a ‘reload’ so to speak, for a continuation in the direction of the prevailing trend. But in this case, while the ‘specs’ positioning continued to increase in size, gold went virtually nowhere.

Commercial hedgers, entities with exposure to the physical gold market, have also been increasing their hedge (short position) in nearly equally impressive fashion.

One might think the hedgers are simply selling to the speculators, hence the lack of price movement, but it doesn’t quite work like that. The current situation is similar to the one in December prior to "lift-off", except in reverse.

At some point something has to give. That point looks like it could be now. We could be in for more of the same-ole chop, but with such a large bearish skew in market positioning, the bias is lower at this time regardless of how its flight path might play out.

Gold Weekly w/Net Futures Positioning

Gold Prices: Market Positioning Highly Unfavorable for Longs

Yesterday, prior to the release of the more hawkish-than-expected FOMC minutes, gold was once again continuing its multi-day tight-rope on trend support running back to January, but by day’s end that was no longer the case – it broke.

In overnight trade, gold is breaking below minor support around 1256. The next level of support on further weakness comes in by way of a lower parallel in the 1230s, below there we will start looking towards the 3/28 swing low around 1205, and then below there the most critical level will be around 1191.

Gold (XAUUSD) Daily

Gold Prices: Market Positioning Highly Unfavorable for Longs

What will tilt the view to the upside? Until we see a correction in market positioning it is difficult at this time to imagine gold moving higher in a sustainable fashion.

Find out what qualities profitable traders possess in our free guide, "Traits of Successful Traders."

---Written by Paul Robinson, Market Analyst

You can follow Paul on Twitter @PaulRobinsonFX, or email him directly at instructor@dailyfx.com

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

DISCLOSURES