Gold Price Rally Blocked by Resistance, Key US Jobs Report Nears

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Gold Price (XAU/USD), Chart and Analysis

  • Gold rejected at resistance.
  • Traders are reducing their long gold bets.

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A weaker US dollar and lower US interest rate expectations gave gold a boost over the past week and saw the precious metal rally above $100/oz. in the process. Some weaker-than-expected U.S. data, including last week’s ISM services report and yesterday’s JOLTs release, fueled the belief that the Fed may have to reduce the size and pace of its rate hikes as concerns about liquidity and growth haunts the market.

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US Treasury yields have held up over the last week with the interest-sensitive 2-year UST now offered at a yield of 4.14%, up around 13bps over the last two sessions but down from 4.36%, a multi-year peak. Higher US interest rates are weighing on non-interest-bearing gold.

US Treasury 2 Year Yield – October 5, 2022

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Chart via TradingView

The weekly gold chart shows the precious metal respecting two Fibonacci retracement levels. The 50% Fib-rich level at $1,617/oz. held the recent selloff and prompted a sharp bounce, while the 38.2% Fib retracement at $1,726/oz. held the Tuesday test. These two levels are likely to remain active in the coming days.

Gold Weekly Price Chart – October 5, 2022

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Later today we have the US non-manufacturing ISM release (15:00 BST) with forecasters expecting a slower pace of expansion compared to last month. The US economic calendar is very light on Thursday, with the monthly US jobs report (NFP) due out on Friday at 1.30pm BST. The US government is trying to moderate the labor market without encouraging a large increase in the unemployment rate – currently 3.7% – and a slowdown in non-farm payrolls this month would be welcomed by the Fed.

For all market-moving data releases and events, see the DailyFX Economic Calendar.

Retail Traders Cut Long Positions, Increase Short Positions

Retail trader data shows that 73.94% of traders are net long with the ratio of traders long to short at 2.84 to 1. The number of traders net long is 6.91% lower than yesterday and 16 ,68% lower than last week, while the number of traders net-short is 2.10% higher than yesterday and 33.13% higher than last week.

We usually take a contrary view to crowd sentiment, and the fact that traders are net-long suggests that gold prices may continue to fall. However, traders are less net long than yesterday and compared to last week. Recent changes in sentiment warn that the current The gold price trend may soon reverse higher despite the fact that traders remain net-long.




of customers is network long




of customers is net short

Change into

misses

Shorts

Oi

Every day -10% 17% -4%
Every week -17% 34% -7%

What is your opinion Gold – bullish or bearish?? You can let us know using the form at the end of this piece or you can contact the author via Twitter @nickcawley1.



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