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XAUUSD – Retail FX traders continue to buy aggressively into Gold Price weakness, and a contrarian view of ‘crowd’ sentiment gives as a firmly bearish trading bias on the precious metal. Indeed, our data shows there are over 2.7 retail trader positions long XAU/USD for every 1 short—near its most extreme since Gold prices set a key low through late 2015.
The caveat is thus straightforward—retail FX is often ‘correct’ at major turning points, and the fact that traders are extremely long suggests we are at a potential sentiment and price extreme. Yet such reversals are only clear in hindsight. We will continue to call for Gold price weakness until we see a substantive shift in trader sentiment.
See next currency section: EURUSD - Euro Forecast to Fall even Further versus US Dollar
--- Written by David Rodriguez, Senior Strategist for DailyFX.com
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