Gold (XAU/USD) Analysis, Price and Chart
- Gold’s sell-off breaks bulls’ support levels.
- The technical setup looks weak but the chart is oversold.
This year’s bullish gold sentiment is being sapped from the market as global equity markets continue to make, or press against multi-year and all-time highs. The recent announcement of three effective coronavirus vaccines, all of which may be available early next year, has helped the overall risk tone, while US interest rates continue to slowly stair-step higher, weakening gold’s allure. Recent US data has beaten expectations and shone a more positive light on the US economy, while the news that president-elect Joe Biden has nominated ex-Fed President Janet Yellen to be the next Treasury Secretary has fuelled expectations of a weaker US dollar for longer.
Gold’s function as an anti-fear alternative is also being challenged by the latest rally in the cryptocurrency market with Bitcoin within a couple of percent of making a fresh all-time high. Bitcoin accounts for nearly 62% of the cryptocurrency market valuation. While the gold market dwarfs the cryptocurrency space, alternative anti-fiat assets are likely to become more popular.
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The daily chart shows how this week’s sell-off has seen gold plunge through previous horizontal support around $1,850/oz. and through the 200-day simple moving average, a bearish technical set-up. Support at $1,800/oz. held yesterday but if broken, gold may re-test the 50% Fibonacci retracement level at $1,763.5/oz. for the first time since early July. The CCI indicator shows that the market is currently oversold which may temper further losses in the short-term.
Gold Daily Price Chart (January – November 24, 2020)
| Change in | Longs | Shorts | OI |
| Daily | 2% | 4% | 2% |
| Weekly | -4% | 1% | -3% |
IG retail trader datashow 84.08% of traders are net-long with the ratio of traders long to short at 5.28 to 1.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.
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What is your view on Gold – are you bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.
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