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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 rises ahead of Fed event, oil retrace on API surplus

Retail long bias in gold and oil drop, silver edges further into extreme long territory.

Fed Source: Bloomberg

Gold Technical analysis, overview, strategies, and levels

Gold prices were in for a higher finish yesterday to cross and close above its 50-day moving average. It also was a breach of yesterday's 1st Resistance level to aid conformist breakout strategies which offered plenty on the breach higher even after the partial retracement. The technicals are still mostly neutral on the daily (more positive on the weekly), but in all the focus for today is on the US Federal Reserve (Fed) announcement that’ll include economic projections that'll be released for the first time since the coronavirus pandemic began, any expectations of a recovery, the interest rate dot plot, and Fed Chair Powell's forward guidance. That means technicals will hold less relevance, and we could be in for increased volatility for the non-yielding precious metal priced in dollars.

Gold Technical Indicators Source: IG charts

IG client* and CoT sentiment for Gold

Retail bias while still heavy long has dropped again on the price increase, from 75% yesterday to 72% as of this morning.

Gold sentiment Source: IG charts

Gold chart with retail and institutional sentiment

Gold Source: IG charts

Silver Technical analysis, overview, strategies, and levels

Unlike gold prices that finished higher, silver prices were in for a lower finish with a break of yesterday's 1st Support level on more than one occasion before eventually holding. Its price has recovered most of yesterday's losses as of this morning, and in turn the gold/silver ratio increase yesterday is at risk of being undone this morning. Here too, technicals may lose relevancy with tonight's Fed announcement, and in turn pivot points are far less likely to hold in the face of the fundamental event.

Silver Technical Indicators Source: IG charts

IG client* and CoT sentiment for Silver

In sentiment, unlike gold and oil where long bias is dropping, here it has risen a notch further into extreme long territory standing at 90%.

Silver sentiment Source: IG charts

Silver chart with retail and institutional sentiment

Silver Source: IG charts

Oil Technical analysis, overview, strategies, and levels

API's (American Petroleum Institute) reading showed a 8.4m surplus late yesterday, and in turn oil prices were in for a brief dip and an eventual close slightly below its open. Oil prices remained within its key pivot points oscillating just above yesterday's 1st Support level, and ahead of key events that'll include EIA's (Energy Information Administration) more encompassing oil inventories estimate, as well as the Fed's economic projections.

Learn more about oil trading.

Oil Technical Indicators Source: IG charts

IG client* and CoT sentiment for Oil WTI

In sentiment, retail bias while still heavy long has dropped from 77% to 71% as of this morning's reading.

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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