Large Swing in Gold Positions Warns of Bounce, but we Prefer Selling
Trade Implications – Gold: Last week we wrote that it was not a time to catch falling knives as our retail positioning-based SSI warned of further gold price weakness. Retail long interest in XAUUSD has since fallen by a remarkable 37 percent while short interest has jumped 61 percent. There are currently only 1.3 traders long for every one short—down from 3.4:1 just 7 days ago.
The impressive swing in positioning warns that gold prices may have set a short-term bottom, but our technical gold forecast warns that bounces should be sold in anticipation of a major low.
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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