Gold Prices Flirt with Disaster- Key Support in Focus Ahead of Powell

1235.

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Gold Trader Positioning

  • A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +7.34 (88.0% of traders are long) –bearishreading
  • Long positions are 0.4% lower than yesterday and 3.3% higher from last week
  • Short positions are 1.8% higher than yesterday and 3.4% higher from last week
  • We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot 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 Spot Gold price trend may soon reverse higher despite the fact traders remain net-long.

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Gold Weekly Price Chart

The technical picture has remain unchanged for the last three weeks with the focus still on critical support confluence at, “the 50% retracement of the late 2016 advance at 1245 backed closely by the 200-week moving average / trendline support at ~1235.” Price has continued to defend this threshold on a weekly close basis keeps the medium-term outlook neutral for now until we get further clarity on a near-term construct in price.

This is a big support zone and although the broader outlook does remain weighted to the downside, the risk is mounting for a larger recovery while above these lows. Weekly resistance stands up at 1285 where the 61.8% retracement converges on the 50-line with broader bearish invalidation at the yearly open at 1302. A break below this key support zone risks accelerated losses for bullion with such a scenario targeting the 61.8% retracement of the late 2016-advance at 1215 and 1204.

Bottom line: We’re looking for a low — gold has responded to key weekly support and the immediate focus is on the June opening range with the broader downtrend at risk while above 1235. For a complete technical breakdown of the near-term Gold price levels (daily & intraday), review this week’s XAU/USD Technical Outlook.

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—Written by Michael Boutros, Currency Strategist with DailyFX

Follow Michaelon Twitter @MBForex or contact him at mboutros@dailyfx.com

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

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