Gold, Silver, Retail Trader Positioning, Technical Analysis – IGCS Commodities Update
- Retail traders increased net-short gold and silver bets
- This is a sign that these precious metals may rise next
- With that in mind, what are key technical levels to watch?
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Taking a look at IG Client Sentiment (IGCS), retail traders have slightly increased their short exposure in gold and silver. IGCS tends to function as a contrarian indicator. As such, if the trend in positioning continues, there might be room for XAU/USD and XAG/USD to push higher ahead. What are key technical levels to watch?
Gold Sentiment Outlook – Bullish
The IGCS gauge shows that about 55.44% of retail traders are net-long gold. Since most traders are biased to the upside, this hints that prices may fall. But, downside exposure has increased by 2.77% and 9.63% compared to yesterday and last week, respectively. With that in mind, recent changes in positioning warn that prices may climb despite overall positioning.
XAU/USD Daily Chart
Gold prices are heading for a sixth consecutive week of gains. If confirmed, that would be the longest winning streak since July 2020. Prices closed above the 123.6% Fibonacci extension at 1937.82, bringing prices closer to the 1978 – 1998 resistance zone. This range was established in April 2022. Negative RSI divergence is present, showing that upside momentum is fading. That can at times precede a turn lower, exposing the 20-day Simple Moving Average (SMA).
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Silver Sentiment Outlook – Bullish
The IGCS gauge shows that about 79% of retail traders are net-long silver. Since most traders are biased to the upside, this hints that prices may fall. This is as net-short positioning increased by 1.08% and 0.27% compared to yesterday and last week, respectively. With that in mind, despite overall positioning, IGCS hints that silver may rise ahead.
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XAG/USD Daily Chart
Silver prices have been in a consolidative state since December. Since then, prices have failed to break above the 78.6% Fibonacci extension at 24.272 consistently. Earlier this month, a bearish Evening Star emerged – see chart below. Downside follow-through has been lackluster, undermining its presence. Key support is the 50-day SMA. A breakout under the latter could open the door to a reversal, placing the focus on the 21.968 – 22.512 inflection zone.
Chart Created in Trading View
— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com
To contact Daniel, follow him on Twitter:@ddubrovskyFX
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