Gold Analysis and News:
- Gold dragged lower by a firmer USD and rallying bond yields
- Key support eyed on Gold with YTD low under threat
Gold Rejects 1800 as USD Picks Up Momentum
A firmer USD and a renewed rally in global bond yields have dragged gold prices, breaking through mild support at 1720-25 to now look at falling through 1700. What’s more, rising China growth concerns as another city will be placed under lockdown measures also add to the pressure on both gold and silver. Recent talk of the ECB gearing up for a 75bps rate hike is likely to keep the precious metal under pressure until next week’s monetary policy meeting. As such, a close below 1700 opens the door back towards key support at 1675-85, while the 200WMA also sits at 1670. Now while technically this should offer good support, the key catalysts in dictating the next significant move will be the upcoming NFP and US CPI report. That being said, should gold close below 1670, the path of least resistance would be for a move towards 1600.
Gold Chart: Daily Time Frame
Source: Refinitiv
IG Client Sentiment Signals Strong Bearish Contrarian Bias
Data shows 82.26% of traders are net-long with the ratio of traders long to short at 4.64 to 1. The number of traders net-long is 2.34% higher than yesterday and 4.68% higher from last week, while the number of traders net-short is 0.41% higher than yesterday and 3.19% 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.
Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Gold-bearish contrarian trading bias.
