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Gold Price Analysis- Can the Upward Momentum Persist?

Gold Price Analysis. Gold prices have maintained their upward trajectory, surpassing levels seen in mid-August. In the same timeframe, retail traders have consistently increased their bearish positions. This observation is drawn from IG Client Sentiment (IGCS), which often serves as a contrarian indicator. Given this observation, the question arises: Can Gold’s recent winning streak continue?

Gold Price Sentiment Analysis – Bullish Bias

The IGCS data reveals that approximately 65% of retail traders have adopted a net-long position on gold. This suggests a prevailing bullish sentiment among most traders, which typically hints at potential price declines. However, it’s noteworthy that downside exposure has risen by 4.61% in the daily timeframe and 42.15% over the past week. This shift in sentiment implies that despite the overall bullish positioning, recent changes in trader exposure suggest the current price trend might extend upwards.

Gold Market Data

Examining the daily chart, gold prices are approaching a crucial technical juncture. This juncture represents the intersection of a descending trendline from May and a former ascending support line from the end of the previous year, as denoted by the pink circle in the daily chart below. A successful resistance hold at this point could pave the way for an extension of the downtrend that has persisted since earlier this year.

In such a scenario, attention would shift to immediate support levels, beginning with the 38.2% Fibonacci retracement level at 1903.46. Below that lies the August low at 1884.89. Breaking below this level would potentially lead to a resumption of broader losses dating back to May. Conversely, breaching the resistance would paint a more bullish technical picture, with a focus on the 23.6% Fibonacci retracement level at 1971.63.

  • Gold prices are nearing a crucial juncture on the daily chart.
  • This juncture combines a descending trendline from May and a prior ascending support line from the previous year.
  • A successful resistance hold here may extend the ongoing downtrend since earlier this year.
  • If resistance holds, attention shifts to immediate support levels: first, the 38.2% Fibonacci retracement level at 1903.46, followed by the August low at 1884.89.

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