Gold Price News and Analysis
– Gold’s chart points to lower prices.
– Retail investors remain heavily long of the precious metal – are they right?
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The latest IG Retail Sentiment Indicatorshows that traders are 81.2% net-long of the precious metal – and going longer – which gives us a strong contrarian bearish bias.
Gold Price Eyes a Fresh 2018 Low Ahead of G7
A lack of fundamental risk drivers has left gold mired in a seven-week downtrend and within $10 of this year’s low at $1,282/oz. The precious metal is nearing support at $1,286 – Fibonacci 61.8% retracement – just ahead of this year’s low at $1,282/oz. made on May 21. A break and close below this level leaves gold vulnerable to further losses all the way down to $1,236.6/oz.On the upside the seven-week downtrend kicks in at $1,295/oz. just ahead of the 20-day moving average at $1,296.4/oz.
US Treasury yields continue to weigh on gold as well with the interest-rate sensitive UST 2-year back at 2.50%, just 10bps off its recent decade high level. Gold becomes less attractive as a store of wealth when US Treasury yields rise.
While the chart points to lower prices, gold bulls may find some reprieve if the ongoing US trade war flares up again, sending investors into risk-adverse assets like gold, CHF or JPY. G7 finance ministers recently criticized the Trump’s administration’s actions, and may well repeat their call to rescind the tariffs at the G7 annual summit on June 8-9. Any escalation from either side may well prompt a move back into the precious metal.
Global Trade War Primers:
Gold Spot Price Chart Daily Time Frame (August 2017 – June 5, 2018)
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— Written by Nick Cawley, Analyst