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Gold Price (XAU/USD), Chart, and Analysis
- Gold respects multi-week support.
- The daily gold chart has something for everyone.
- Retailer data remains mixed.
Gold Price Update – Cycling into Multi-Week Support
Gold tested a known support level late last week, but failed to break below it as U.S. Treasury yields fell throughout the session. Support – around $1,786/oz. – Proving resilient, the precious metal closed in bullish territory, leaving a bullish hammer candle on the chart. This candlestick pattern usually indicates a bullish trend reversal, especially before a bearish trend.
Trading the Bullish Hammer Candle
The daily chart also shows a negative moving average crossover, with a death cross in mid-June. This cross, the 5-day SMA below the 200-day SMA, is often referred to as a market negative by technical traders, as it indicates that near-term price momentum is on the downside.
Death Cross: What is it and How to Identify it When Trading
With the US closed today to celebrate Independence Day, sales may be limited in all markets. Gold is likely to trade in the $1,786/oz range. to $1,840/oz. Short-term volatility in U.S. Treasury yields could be the driver of the next move. U.S. 10-year Treasury yields are now 60 basis points below their recent peak of 3.48% amid heightened fears of a U.S. recession. Financial markets are now pricing in a U.S. rate cut in mid-2023, easing pressure on the precious metal. Until then, the Fed will continue to aggressively hike rates in response to rising inflation, which is bad for gold. Currently, gold is likely to be establishing a range, which is a potential boon for traders.
Gold Daily Price Chart – July 4, 2022
Retail data shows that 84.56% of traders are net long, with a long-to-short ratio of 5.47 to 1. Net longs increased by 1.34% from yesterday and 3.95% from last week, while net shorts increased by 9.57% from yesterday and decreased by 5.02% from last week.
We usually see crowd sentiment as a contrarian, and the fact that traders are net long suggests that gold prices could fall further. The net long position is less than yesterday, but more than last week. The combination of current sentiment and recent changes gives us another mixed bias towards gold trading.
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