Despite increasing tensions between Russia, Ukraine, and growing fears of invasion, gold prices are trading at a slow pace.
Bullion prices have been under pressure due to increasing geopolitical risk. However, bulls are now facing a wall of resistance that is formed by historical Fibonacci levels.
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The Federal Reserve’s two main metrics are inflation and employment. Friday’s release of an optimistic NFP report puts US inflation data front and center of risk sentiment. This could be a catalyst for Gold prices.
GOLD PRICE ANALYSIS
The Gold price is aiming for a second consecutive week of gains. Key Fibonacci levels for both 2020 and 2021 move continue to support and resist the yellow metal.
Bulls are now trying to break the 50% retracement from the 2021 move at $1818, but the next hurdle is at the next Fib level at $1,833, which opens the door for a move towards $1852.
Chart created by Tammy Da Costa with TradingView
The formation of a possible doji candle on a daily basis is an indication that bulls are losing steam and struggling to gain traction.
The CCI (commodity channel indicator) is still within a normal range. However, an increase of selling pressure and a shift to riskier assets could cause prices to fall back towards the psychological level of $1800. This could lead to a continuation in the bearish trend which has been evident since August 2020’s high.
Daily Chart: Gold (XAU/USD).
Gold: Retail trader data indicates that 74.66% are net-long, with the ratio between traders long and short at 2.95-1. Today’s net-long traders are 5.56% less than yesterday, 15.39% less than last week, and 2.95 to 1. The ratio of traders long to short is 25.62% higher than yesterday, and 47.16% more than last week. Yesterday’s net-short traders are 25.62% higher than yesterday, and 47.16% greater than last week.
We tend to take a contrarian approach to crowd sentiment. The fact that traders are net-long suggests that Gold prices could continue to fall.
However, traders are now net-longer than they were yesterday and less so than last week. Recent sentiment changes indicate that the current Gold price trend could soon reverse, despite the fact that traders are still net-long.
