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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Gold retraces, oil oscillates despite EIA deficit

Longs pile in on the precious metal plummet, setting the stage for potential volatile movement.

Oil Source: Bloomberg

Gold Technical analysis, overview, strategies, and levels

Conformist breakout strategies finally had a chance to outperform yesterday, but it wasn't to the upside rather a sell breakout strategy off of yesterday’s 1st Support. Although the technicals are flashing green in both the short-term and long-term, and with plenty of fundamental factors aiding the safe haven non-yielding metal including yesterday's US Federal Reserve minutes that considered reviving the promise to keep rates low until conditions are met as witnessed during the Great Recession, the two main factors pointing to a harsh squeeze opposite include serious potential future liquidity concerns as well as a speculative move against the heavy to extreme long bias held by traders. Technicals may hold less relevance today with the US dollar likely getting volatile on Non-Farm Payrolls data.

Gold Technical Indicators Source: IG charts

IG client* and CoT sentiment for Gold

From a sentiment standpoint, longs aren't getting out, with heavy long bias rising to 71% amongst retail traders, and still below CoT (Commitment of Traders) speculators at 85%.

Gold sentiment Source: IG charts

Gold chart with retail and institutional sentiment

Gold Source: IG charts

Oil Technical analysis, overview, strategies, and levels

Oil prices have failed to offer much volatility, even after yesterday's EIA (Energy Information Administration) US crude oil inventories estimate that showed a sizeable deficit of 7.2m, not that far off from API's reading the night before of a 8.2m drawdown. The net result on both days however has been ongoing oscillation within its key pivot points. Short-term technicals are more consolidatory, but the leftover volatility from the infamous May contract Monday rollover mayhem has meant long-term technicals are still showing volatility. A WSJ report regarding a potential OPEC+ breakdown and a spike in US coronavirus cases are still fundamental items to consider that could reintroduce volatility, and make technicals less relevant in the process as levels are expected to break with ease should that happen and end the current calm.

Learn more about oil trading.

Oil Technical Indicators Source: IG charts

IG client* and CoT sentiment for Oil WTI

As for trader sentiment, retail long bias has moved only slightly higher to 58%, far less bullish than CoT at 83%.

Oil sentiment Source: IG charts

Oil WTI chart with retail and institutional sentiment

Oil Source: IG charts

*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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This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

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