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. See our updated Privacy Policy here.

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
Oil - US Crude
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Forex liquidity makes it easy for traders to sell and buy currencies without delay, and also creates tight spreads for favorable quotes. Low costs and large scope to various markets make it the most frequently traded market in the world. Learn more here: https://t.co/arxYmtQeUn https://t.co/rFlQtyQS81
  • Canadian Dollar snapped a three-week losing streak after USD/CAD stalled at key technical resistance. Get your CAD weekly forecast from @MBForex here: https://t.co/BPHuKecwnz https://t.co/73OmuCKfU9
  • Forex quotes reflect the price of different currencies at any point in time. Since a trader’s profit or loss is determined by movements in price, it is essential to develop a sound understanding of how to read currency pairs. Learn how to read quotes here: https://t.co/CNtqrKWDBY https://t.co/KzhQnGiLyt
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/cuneuJNZlH
  • Get your snapshot update of the of top level exchanges and key index performance from around the globe here: https://t.co/d8Re5anlG5 https://t.co/danCiP5vqK
  • Traders utilize varying time frames to speculate in the forex market. The two most common are long- and short-term-time frames which transmits through to trend and trigger charts. Learn more about time-frame analysis here: https://t.co/9S5tXIs3SX https://t.co/JhYoQ7I19K
  • The Nasdaq 100 index is aiming to breach a key resistance level at 14,950 for a second time. A successful attempt may open the door to further gains, although the MACD indicator flags signs of weakness. Get your equities forecast from @margaretyjy here: https://t.co/BEYupi32qB https://t.co/PWeXE8tZVY
  • 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/t34kotPE8R
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/BdgFmkRxVw https://t.co/lM1OIJdjhr
  • Trading Forex is not a shortcut to instant wealth, excessive leverage can magnify losses, and sentiment is a powerful indicator. Learn about these principles in depth here: https://t.co/lZFM8youtX https://t.co/6qGEVjDlN6
Gold Price Forecast: Decision Time Nears - Levels for XAU/USD

Gold Price Forecast: Decision Time Nears - Levels for XAU/USD

Christopher Vecchio, CFA, Senior Strategist
Advertisement

Gold Price Outlook:

  • The narrative around gold prices may be shifting as delta variant concerns infect global financial markets.
  • But gold prices are still in ‘the technical woods’ yet, having failed to achieve 1835.
  • According to the IG Client Sentiment Index, gold prices have a bullish bias in the near-term.

Chopping that Wood

Two weeks ago, it was noted that “gold prices find themselves attempting to ‘turn the corner,’ technically speaking. Technical gauges of momentum have indeed started to turn higher, but questions remain. As the saying goes, ‘more wood needs to be chopped’ before gold prices exit ‘the technical woods.’”

Since then, gold prices have been chopping that wood, sitting along the brush line now, with the clearing in sight. Alas, questions remain. The rally seen in July failed to clear the technical threshold of 1835, which was previously noted as the point with which we could say with a degree of certitude that gold prices had exited ‘the technical woods.’

Now that financial markets are taking on a risk-off tone thanks to delta variant concerns – akin to last summer, when fears of a second wave helped spur gold prices to a new all-time high – it appears that gold prices have a strengthened fundamental tailwind.

Gold Volatility and Gold Prices Out of Sync

Historically, gold prices have a relationship with volatility unlike other asset classes. While other asset classes like bonds and stocks don’t like increased volatility – signaling greater uncertainty around cash flows, dividends, coupon payments, etc. – gold tends to benefit during periods of higher volatility. Like last summer, high volatility is beginning to emerge as COVID infection concerns proliferate.

GVZ (Gold Volatility) Technical Analysis: Daily Price Chart (July 2020 to July 2021) (Chart 1)

Please add a description for the image.

Gold volatility (as measured by the Cboe’s gold volatility ETF, GVZ, which tracks the 1-month implied volatility of gold as derived from the GLD option chain) was trading at 15.84. The relationship between gold prices and gold volatility remains out of sync on a longer time horizon, but signs have emerged that the relationship is normalizing. The 5-day correlation between GVZ and gold prices is -0.40 while the 20-day correlation is -0.67. One week ago, on July 12, the 5-day correlation was -0.49 and the 20-day correlation was -0.12.

Gold Price Rate Technical Analysis: Daily Chart (July 2020 to July 2021) (Chart 2)

Please add a description for the image.

Gold prices have struggled to overcome the descending channel measured against the August 2020 and January 2021 swing highs, rebuffed by the cluster of Fibonacci levels in the low-1830s. It was previously noted that “it would appear that gold prices aren’t out of ‘the technical woods’ until 1835 is achieved,” and the high reached last week came in at 1834.20 – not yet achieving our bullish confidence threshold. Today’s daily hammer candle at the confluence of bull flag resistance (now support) and the daily EMA envelope suggest that momentum has turned higher in the short-term; price action over the past few days is merely a back-and-fill.

Gold Price Technical Analysis: Weekly Chart (October 2015 to July 2021) (Chart 3)

Please add a description for the image.

As noted in mid-June, “it is now no longer applicable to apply a longer-term bullish view on gold prices; the outlook is decidedly neutral at present time. The threat of a more significant breakdown looms, and without more progression back above the descending trendline from the August 2020 and January 2021 highs, then it stands to reason that the technical structure is unfavorable.” We may be nearing the point at which it is once more appropriate to take a longer-term bullish perspective.

GOLD PRICE FORECAST (July 19, 2021) (CHART 4)

Please add a description for the image.

Gold: Retail trader data shows 84.78% of traders are net-long with the ratio of traders long to short at 5.57 to 1. The number of traders net-long is 7.25% lower than yesterday and 10.43% lower from last week, while the number of traders net-short is 10.14% higher than yesterday and 7.12% 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.

Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

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

DISCLOSURES