How high is too high for gold?
Another week, another record high for gold. And another start to the week where I am asking myself “when is this rally going to top?”. As you can see, bears keep getting slaughtered, despite traditional COT metrics pointed to an overbought market.
Gross and net-long exposure among large speculators sit just off their highest level since the Pandemic, which could point towards a sentiment extreme. Longs outnumber shorts by a ratio of 5:1, although there is little short interest from large speculators overall.
However, total open interest is about half it was around the time of the pandemic, which could suggest plenty of investors remained sidelined and are looking for pullbacks over chasing prices higher. The recent rise of total open interest has helped pull speculative open interest (adjusted for total open interest) back from record highs. Longs outnumber shorts with a ratio of 5:1, although shorts remain low and not high by historical standards.
Therefore, I suspect that bulls remain lurking on the sidelines despite the relatively high level of gross-long exposure. And that dips on gold are more likely to be brought than not. They just need to see a dip first.
Gold futures technical analysis:
The daily chart remains in a clear bullish trend, although recent price action shows a hesitancy to simply break to a new high. The daily RSI (14) has formed a bearish divergence, ands Friday’s hanging man candle has helped form a lower high from gold’s all-time high (ATH). Perhaps some mean reversion towards the 20-day EMA could be due, near the September high and 2700 handle.
-- Written by Matt Simpson
Follow Matt on Twitter @cLeverEdge
The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, commodity futures, or digital assets, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to FOREX.com or GAIN Capital refer to StoneX Group Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.
Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary.
The products and services available to you at FOREX.com will depend on your location and on which of its regulated entities holds your account.
FOREX.com is a trading name of GAIN Global Markets Inc. which is authorized and regulated by the Cayman Islands Monetary Authority under the Securities Investment Business Law of the Cayman Islands (as revised) with License number 25033.
FOREX.com may, from time to time, offer payment processing services with respect to card deposits through StoneX Financial Ltd, Moor House First Floor, 120 London Wall, London, EC2Y 5ET.
GAIN Global Markets Inc. has its principal place of business at 30 Independence Blvd, Suite 300 (3rd floor), Warren, NJ 07059, USA., and is a wholly-owned subsidiary of StoneX Group Inc.
© FOREX.COM 2024