Bullish technicals for precious metals remain tested on the weekly
Gold and silver suffer a week of retracement, oil price drop tests extreme long bias amongst retail and institutional traders.
GOLD: Weekly bull trend stalling at the highs as bull trend line breaks
With its long-term weekly bull trend line broken on the weekly chart, the pair’s bull trend has continued to stall heavily at the highs, and with more negative technical bias when looking at the daily chart as the pair’s price movement remains range-bound from roughly the $1490s to the $1560s. And in terms of sentiment, retail bias is up 6% for the week on an increase in longs while short positions dwindle as they get enticed into taking profit. As for the CFTC’s Commitment of Traders (CoT) report, the latest shows long bias rising a notch to an 86% extreme long thanks to an increase in gold long positioning by 28,882 lots and an insignificant drop in gold shorts by 963 lots.
SILVER: Retracement for silver as precious metals continue to stall at the highs
As with gold, the pair’s price stands close to its short-term support level as more technical indicators move back to neutral following an inability to hold onto recent fresh gains. On the weekly outlook, its still a bull trend that’s stalling (as is the case with gold), but on the daily outlook it has been undone following consecutive price drops. In CoT bias, it’s down a few percent to a still heavy long 68% due to an increase in short positions by 4,626 lots, though its no surprise institutional bias is usually heavier in gold than is the case with silver. Retail bias on the other hand, while also majority long is at extreme long levels of 88%, with fresh shorts quick to close out on any retracement back down.
OIL – US CRUDE: Geopolitics and economic data items to consider
Both supply and demand side factors of the energy commodity remain likely to get tested, the former by any geopolitical shocks and the latter by economic data that as of this morning is a bit more positive on better than expected figures out of China’s Caixin manufacturing Purchasing Managers’ Index (PMI) reading. Overall, the underlying will remain volatile enticing breakout strategies (upside or downside depending on any shock) should momentum increase. In production news, US Baker Hughes oil rig count posted yet another consistent decline to 713 from 719. In terms of technical bias, it’ll hold less relevance in the face of fundamental events but will shift more often given the main technical indicators are huddled close to each other. Lastly, in terms of sentiment, retail bias is at extreme long levels at 78% and up 11% since the start of last week.
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