Gold, XAU/USD, Silver, XAG/USD, Technical Analysis, Retail Trader Positioning - Talking Points
- Fundamental analysis hints gold, silver may continue falling
- Retail trader bets offer upside view on gold, downside for silver
- How are technicals aligning with the fundamentals, positioning?
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Gold and Silver prices have been struggling to find upside momentum in recent weeks amid global efforts from central banks to tame high inflation. This is making for a difficult fundamental environment for these anti-fiat precious metals. How have retail traders been positioning themselves in XAU/USD and XAG/USD amid recent price action and what could that mean for the road ahead? For a deeper dive into the analysis, check out this week’s webinar recording above.
Gold Sentiment Outlook - Bullish
The IGCS gauge shows that about 81% of retail traders are net-long gold. IGCS tends to function as a contrarian indicator. As such, the fact that traders remain net-long hints prices may continue falling. However, short bets have climbed by 2.2% and 20.32% compared to yesterday and last week respectively. With that in mind, recent changes in sentiment warn that gold could reverse higher.
![Gold Sentiment Outlook - Bullish](https://a.c-dn.net/b/0CAiJQ/Gold-Silver-Price-Forecast-Retail-Traders-Remain-Long-Despite-the-Downside-Risks_body_Gold_Client_Positioning.png)
XAU/USD Daily Chart
On the daily chart, XAU/USD remains in a downtrend since early March, but recent price action is looking neutral. The yellow metal appears to be consolidating between resistance (1869 – 1879) and support (1787 – 1810). In fact, it seems that gold could form a Bearish Rectangle. Breaking under the range of support could be a sign of downtrend resumption. That would place the focus on lows from December. Otherwise, pushing above resistance could shift the outlook increasingly bullish.
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![XAU/USD Daily Chart](https://a.c-dn.net/b/4x9n1O/Gold-Silver-Price-Forecast-Retail-Traders-Remain-Long-Despite-the-Downside-Risks_body_Picture_8.png)
Silver Sentiment Outlook - Bearish
The IGCS gauge shows that roughly 95% of retail investors are net-long silver. Since nearly the absolute majority of traders are positioned to the upside, this is a sign that prices may continue falling. Downside exposure has been falling recently, declining by 12.79% and 33.92% versus yesterday and last week respectively. With that in mind, the combination of current readings and recent changes in IGCS hint that Silver may remain biased to the downside.
![Silver Sentiment Outlook - Bearish](https://a.c-dn.net/b/1l0PIE/Gold-Silver-Price-Forecast-Retail-Traders-Remain-Long-Despite-the-Downside-Risks_body_Silver_Client_Positioning.png)
XAG/USD Daily Chart
Similar to gold, silver prices have been in a downtrend since early March. Recent price action has been looking neutral as well. A Bearish Death Cross remains between the 20- and 50-day Simple Moving Averages (SMAs), offering a downside bias. Key support seems to be the May low at 20.46. Clearing the latter exposes the midpoint of the Fibonacci extension at 19.63. Otherwise, clearing resistance (22.20 – 22.51) opens the door to a bullish technical outlook.
![XAG/USD Daily Chart](https://a.c-dn.net/b/0UbLWT/Gold-Silver-Price-Forecast-Retail-Traders-Remain-Long-Despite-the-Downside-Risks_body_Picture_9.png)
*IG Client Sentiment Charts and Positioning Data Used from June 21st Report
--- Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter