3. XAU/USD Weekly Trade Levels
โข Gold prices are attempting a third weekly
advance with XAU/USD up more than 0.73% in
early US trade on Monday.
โข The rally is now approaching key resistance
targets just higher โ the first major test for the
gold breakout and a possible turning point for
the longer-term trend.
5. A Trading Standpoint
โข In last Gold Weekly Price Outlook we noted to be
on the โlookout for a breakout to offer guidance
on the medium-term outlook.
โข From a trading standpoint, the focus remains
unchanged- pullbacks should be limited to
1738 IF price is heading higher with a weekly
close above 1791 needed to fuel larger recovery.โ
โข Last weekโs close was at 1792- ok so what nowโฆ
6. 52-Week Moving Average
โข A re-work of the slope has identified a simple
trendline off the late-May & 2020 lows
(purple).
โข The 52-week moving average now converges
on this slope around ~1805 and further
highlights the technical significance of
this resistance zone.
7. Fibonacci Retracement
โข A topside breach exposes the 61.8% Fibonacci
retracement of the June decline at 1825 and the
yearly high-week close at 1849- look for larger
reaction there IF reached with a breach / close
above needed to mark resumption of the broader
uptrend in Gold.
โข Initial weekly support rests back at the monthly
open / 61.8% retracement of this advance
at 1756/57 with broader bullish invalidation
steady at 1738/47.
8. Major Resistance Objectives
โข The gold rally is approaching some major
resistance objectives and while the broader focus
does remain higher, weโre looking for possible
inflection off one of these zones.
โข From a trading standpoint, the risk for near-term
exhaustion up here- losses should be limited to
the monthly open IF price is indeed heading
higher with a close above 1849 ultimately needed
to fuel the next leg higher in price.
9. Key Inflation Data Out
โข Keep in mind there is a flurry of central
bank interest rate decision on tap this
week from the BoC, BoJ and the ECB
ahead of key inflation data out of the US
with the Core Personal Consumption
Expenditure (PCE) slated for Friday.
11. IG Client Sentiment
โข It shows traders are net-long Gold- the ratio
stands at +3.20 (76.21% of traders are long) โ
typically bearish reading.
โข Long positions are 8.94% higher than
yesterday and 6.39% lower from last week
โข Short positions are 11.15% higher than
yesterday and 9.80% higher from last week
12. IG Client Sentiment - I
โข We typically take a contrarian view to crowd
sentiment, and the fact traders are net-long
suggests Gold prices may continue to fall.
โข Yet traders are less net-long than yesterday
and compared with last week.
โข Recent changes in sentiment warn that the
current Gold price trend may soon reverse
higher despite the fact traders remain net-
long.
13. Gold Prices Aimed Cautiously Higher
โข Gold prices aimed cautiously higher on Monday
as the anti-fiat yellow metal continued its near-
term uptrend since the beginning of October.
โข The direction of the US Dollar and Treasury yields
often have key influences on XAU/USD.
โข Since the Greenback was relatively flat to start
the week, it was the performance in US
government bonds that likely boosted gold
prices.
14. The 10-Year Treasury Yield
โข The 10-year Treasury yield dipped cautiously,
but the move was not as aggressive as what
was seen at the front-end.
โข The 2-year bond yield dropped almost 4% on
Monday, bringing it down to roughly 0.43%
from last weekโs close of about 0.46%.
โข This could reflect ebbing hawkish Federal
Reserve policy expectations following
persistent gains since late September.
15. Gold Will Face US Conference Board
Consumer Confidence Data
โข Falling yields can make the non-interest-bearing asset
relatively more attractive.
โข During Tuesdayโs Asia-Pacific trading session, Treasury
yields cautiously climbed, sending the yellow metal
lower.
โข Over the remaining 24 hours, gold will face US
Conference Board Consumer Confidence data.
โข A decline to 108.3 in October from 109.3 prior is
expected.
โข A worse outcome could weaken hawkish Fed bets,
opening the door to a rise for the yellow metal.
17. Gold Sentiment Analysis - Neutral
โข According to IG Client Sentiment (IGCS), roughly
72% of retail traders are net-long XAU/USD.
โข Short positioning is on the rise, increasing by
30.33% and 34.37% over a daily and weekly basis
respectively.
โข IGCS typically acts as a contrarian indicator. Since
the majority of investors are net-long, the yellow
metal may fall.
โข But, recent shifts in positioning are producing a
bullish-contrarian trading bias.
