Gold Prices May Have Set Important Low
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Gold– A significant shift in retail forex positions suggests that Gold prices may be at the cusp of an important reversal. Our data shows that the majority of retail traders have remained net-long Gold since the precious metal traded below $1,200 in May, and we have treated this as consistent contrarian signal that Gold prices may continue lower. Yet the crowd has most recently sold aggressively into the XAU/USD bounce; short positions are 27 percent above levels last week while long positions have fallen 10 percent.
It’s early yet, but a sustained shift towards crowd selling would shift our trading bias in favor of buying into Gold price gains.
See next currency section: EURUSD - Euro Likely to Test Critical Resistance, Next Move is Key
--- Written by David Rodriguez, Quantitative Strategist for DailyFX.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.