Gold (XAU/USD) – Repeated Attempts at a Fresh All-Time High, US Retail Sales Weigh

Gold (XAU/USD) – Repeated Attempts at a Fresh All-Time High, US Retail Sales Weigh

Gold continues to test, and reject, its previous all-time high at $2,485/oz. and a break higher is being pared by a strong US retail sales report

• Gold unable to break higher as resistance holds firm.
• Weekly net-short positions jump.

Gold is coming under pressure after the release of a stronger-than-expected US retail sales report. Expectations of a 50 bp rate cut have been pared back – from 38{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to 25{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} – while expectations of a smaller 25 basis point cut have been boosted from 62{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} to 75{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38}.

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Gold continues to test the mid-July all-time high at $2,484/oz. and is likely to do so again but slightly further out. The daily chart remains technically bullish – short-term higher lows and supportive simple moving averages – with initial support off the 20-dsma at $2,417/oz. followed by $2,400/oz. A break below $2,380/oz. would negate the short-term bullish outlook.

Gold Price Daily Chart

Chart via TradingView

Retail trader data shows 50.72{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} of traders are net-long with the ratio of traders long to short at 1.03 to 1.The number of traders net-long is 8.89{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} higher than yesterday and 13.18{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} lower than last week, while the number of traders net-short is 9.63{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} lower than yesterday and 34.51{3da602ca2e5ba97d747a870ebcce8c95d74f6ad8c291505a4dfd45401c18df38} higher than 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. Positioning is more net-long than yesterday but less net-long from last week. The combination of current sentiment and recent changes gives us a further mixed Gold trading bias.

What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or contact the author via Twitter @nickcawley1.