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Forex Sentiment : Action Short 51% Volume 3171.81 lots with 17326 positions
Action Long 49% Volume 3054.84 lots with 14719 positions
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Gold prices have confirmed a push above a bullish Falling Wedge chart pattern. However, prices are stuck around the key 1744 – 1755 resistance zone as well as the 50-day Simple Moving Average. As such, we could see XAU/USD turn lower here back towards the March low. Pushing above immediate resistance on the other hand may open the door to extending last month’s bounce.Note
GOLD AWAITS US CPI DATADespite edging lower towards the backend of the week, price action in gold had been somewhat encouraging with the precious metal attempting to form a double bottom. A culmination of a softer USD and US yields had in large part underpinned gold prices, however, the key area at $1760-65 has continued to cap rallies and thus keeps risks tilting lower.
As we look towards next week, the main focus will be on the US CPI reading, which will be a key factor as to whether gold prices managed to break resistance or head back towards $1700. Taking a look at last months reading, which saw the headline CPI rate in line with expectations, the core reading had been slightly softer however. In turn, the initial reaction in gold was higher, on the basis that US yields edged lower. Alongside this, given that the market remain fixated that a spike in inflation is coming, should we see a slight disappointment in the figure, this is likely to give good grounds for a breach of $1760-65, my thought behind this is that yields have been the largest determinant for the precious metal. The chart below highlights the relationship between gold and real yields (inverted).
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GOLD LEVELS TO WATCHThe main area to focus on is $1760-65, in which a move lower in US yields would be needed to help gold break this resistance. Should this area be broken, this paves the way for a move to 1790-1800. While on the flip side, a close below $1670 would likely invalidate the potential recovery and open the doors to $1600.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.