Gold, silver price forecast: XAU/USD, XAG/USD may rise as retail traders sell

Gold and silver prices have been on the rise as of late, tracking a decline in the US dollar and Treasury yields. Now, retail traders are increasingly betting that XAU/USD and XAG/USD could reverse lower. This can be seen by looking at IG Client Sentiment (IGCS), which tends to behave as a contrarian indicator. With that in mind, could an increasingly bearish shift in retail traders hint at more gains to come for the precious metals? For a deeper dive into the fundamentals, check out the webinar recording above!

Gold sentiment outlook - bullish

The IGCS gauge shows that about 84% of retail traders are net-long gold. Since most traders are still biased to the upside, this suggests that prices may continue falling. However, downside exposure has increased by 3.03% and 16.08% compared to yesterday and last week respectively. With that in mind, recent shifts in positioning are hinting that the price trend may soon reverse higher.

XAU/USD technical analysis

On the daily chart, gold has confirmed a breakout above the near-term falling trendline from late April. That has opened the door to reversing the downtrend since then. Recently, prices have also taken out the 20-day Simple Moving Average (SMA), exposing the 50-day line. On balance, this could hint at further gains. Otherwise, a turn lower would place the focus on the 1787 – 1810 support zone.

Silver sentiment outlook - bullish

The IGCS gauge shows that about 95% of retail traders are net-long Silver. Since the majority of them are still heavily biased to the upside, this suggests that prices may continue falling. However, downside exposure has climbed by 9.57% and 6.78% versus yesterday and last week respectively. With that in mind, recent changes in positioning are hinting that Silver may soon reverse higher.

XAG/USD technical analysis

Silver prices confirmed a breakout above the falling trendline from the middle of April, opening the door to extending gains. Still, prices have been unable to break above the former 21.42 – 22.26 support zone, which could hold as new resistance. A breakout higher exposes the 50-day SMA, which could reinstate the downside focus. Such an outcome would place the focus back on the May 13th low at 20.462.

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. 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.