Gold, Retail Trader Positioning, Technical Analysis – IGCS Update
- Gold prices extend recent push higher to trendline
- Retail traders are becoming slowly more bearish
- Will XAU/USD push higher in the coming sessions?
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Gold prices have been aiming higher in recent weeks. In response retail traders have been cautiously increasing downside exposure. This can be seen by taking a look at IG Client Sentiment (IGCS), which often functions as a contrarian indicator. With that in mind, could further upside progress be in store for the yellow metal in the coming sessions?
Gold Sentiment Outlook – Bearish
The IGCS gauge shows that about 75% of retail traders are net-long gold. Since most of them are biased to the upside, this hints that prices may continue falling down the road. Meanwhile, downside exposure has increased by 23.58% and 26.59% compared to yesterday and last week, respectively. With that in mind, recent changes in positioning hint that the price trend may soon reverse higher despite overall exposure.
XAU/USD Daily Chart
On the daily chart below, gold has extended a cautious push higher above the 38.2% Fibonacci retracement level of 1903.46. That is now placing the focus on the falling trendline from earlier this year. The latter could reinstate the broader downside focus, pushing XAU/USD back to the mid-August swing low of 1884.89.
Otherwise, clearing above the falling trendline, as well as the 1936.90 inflection zone, exposes the 23.6% level of 1971.63 as key resistance. Extending gains beyond that could open the door to revisiting the 2048.79 – 2081.82 resistance zone.
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Chart Created in Trading View
— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
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