Gold prices surge after surprise 0.5% Fed rate cut

Gold Technical analysis, overview, strategies, and levels

Gold prices didn’t just make a move past yesterday's 1^st Resistance level, but far more than that as the US Federal Reserve’s (Fed) 0.5% surprise rate cut took US 10-Year Treasury yields to record lows, and aided the non-yielding precious metal’s price in a conformist breakout move. Central bank easing has generally aided the precious metal, and the RBA (Reserve Bank of Australia) cut rates by 0.25% yesterday while the BoC (Bank of Canada) may reduce its key rate by up to 0.5% this evening as well. Technicals are less relevant in the face of big fundamental moves, but that being said that are mostly flashing green with its price above the last of its main short-term moving averages, and a positive DMI (Directional Movement Index) cross occurring.

IG client^* and CoT sentiment for Gold

Retail longs were relieved with the bias dropping 6% but remaining in heavy long territory at 70%, less than that of CoT (Commitment of Traders) speculators at an extreme long 88%.

Gold chart with retail and institutional sentiment

Silver Technical analysis, overview, strategies, and levels

With the US dollar in retreat yesterday, it was just a run towards its 1^st Resistance level, but well past both it and its 2^nd resistance level as well. That took silver prices crossing back above its 200-day moving average, but where silver was a clear underperformer compared to gold. Thus, the gold/silver ratio managed to finish even higher, rising for eight out of the last nine trading sessions.

IG client^* and CoT sentiment for Silver

In sentiment, retail bias hasn’t dropped as it did with gold, but instead risen to an extreme long 94%.

Silver chart with retail and institutional sentiment

Oil WTI Technical analysis, overview, strategies, and levels

Oil prices made a move towards yesterday's 1^st Support level, briefly breaching it before recovering this morning as conformist breakout strategies failed against contrarian reversals. In oil data, API's estimate (American Petroleum Institute) showed a 1.69M surplus following last week's 1.3M surplus, and EIA (Energy Information Agency) is up next expected to show a 2.8M increase. In all, oil data will be less relevant in the face of two fundamental forces: (1) Oil demand due to negative effects from the coronavirus, and (2) tomorrow's OPEC meetings that may result in a cut in supply to aid the energy commodity. That means yesterday's relatively rangebound moves may be on the verge of a shock to a new level by the end of this week (if not before).

Learn more about oil trading.

IG client^* and CoT sentiment for Oil WTI

Oil WTI chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am.

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