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Gold Prices Test 2015 Uptrend Support Ahead Of Jackson Hole

By Kurt Osterberg · On August 19, 2018

Fundamental Forecast for Gold:Bullish

GOLD TALKING POINTS:

Gold prices drop into multi-year uptrend support; haven flows battling USD strength

What’s driving gold prices? Review DailyFX’s 2018 Gold Projections

Gold prices are lower for a sixth consecutive week with the precious metal plummeting nearly 2.6% to trade at 1179 ahead of the New York close on Friday. Despite the magnitude of the decline, prices are poised to close well off the weekly lows with our focus next week on a key technical support barrier.

GOLD AT CRITICAL LEVELS AS USD STRUGGLES / BROADER RISK ASSETS STUTTER

It was a volatile week for broader equity markets as rising concerns regarding deteriorating economic conditions in Turkey and the ongoing US / China tariff skirmish weighed on investor sentiment. At the same time, underlying strength in the US Dollar (which has kept pressure on gold) has started to ease with the DXY struggling ahead of slope resistance highlighted earlier this week. Will these mounting geo-political concerns and a waning greenback finally offer some support for the battered yellow metal?

For gold, the price ‘washout’ into fresh yearly lows (a 14% drop from the April highs) warrants attention as we head into next week’s annual Central Banking Symposium in Jackson Hole Wyoming. Despite the decline in price, gold has managed to hold just above a key pivot in price and the focus remains on a reaction off the recent lows registered this week

SPOT GOLD IG TRADER SENTIMENT

A summary of IG Client Sentiment shows traders are net-long Gold- the ratio stands at +5.36 (84.3% of traders are long) –bearish reading

Long positions are2.6% higher than yesterday and 9.3% lower from last week

Short positions are 3.7% higher than yesterday and 12.8% higher from last week

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Spot Gold price trend may soon reverse higher despite the fact traders remain net-long.