As Prices Dwindle, Retail Traders Become More Bullish

Gold, Silver, Retail Trader Positioning, Technical Analysis – IGCS Commodities Update

• Gold and silver costs proceed aiming cautiously decrease
• Retail merchants are actually changing into more and more bullish
• Is this a warning signal that XAU/USD, XAG/USD might fall?

Gold and silver costs have been cautiously aiming decrease in latest weeks in what has been a pause from the final uptrend for the reason that finish of final 12 months. Looking at IG Client Sentiment (IGCS), retail merchants have responded by growing their upside publicity in these treasured metals as of late. IGCS tends to operate as a contrarian indicator. With that in thoughts, might additional ache be ins tore for XAU/USD and XAG/USD?

Gold Sentiment Outlook – Bearish

The IGCS gauge exhibits that about 63% of retail merchants are net-long gold. Since most merchants are nonetheless biased to the upside, this hints that costs might fall down the highway. Meanwhile, draw back publicity has decreased by 3% and 12% in comparison with yesterday and final week, respectively. With that in thoughts, the mixture of general publicity and up to date adjustments in positioning trace that additional losses may be in retailer for gold.

XAU/USD Daily Chart

From a technical standpoint, gold has continued to increase losses within the aftermath of a Bearish Engulfing candlestick sample for the reason that starting of April. Meanwhile, costs have made draw back progress by the 20-day Simple Moving Average. That is now inserting the deal with the 100-day SMA, which might maintain as help and reinstate the broader upside focus. Otherwise, a flip greater locations the deal with 2022 peaks.

Chart Created in Trading View

Silver Sentiment Outlook – Bearish

The IGCS gauge reveals that about 65% of retail merchants are net-long silver. Since most merchants are biased to the upside, this hints that costs might proceed falling down the highway. Meanwhile, draw back publicity has decreased by 7.56% and 38.89% in comparison with yesterday and final week, respectively. With that in thoughts, general publicity and up to date adjustments trace that additional losses may be due for silver.

XAG/USD Daily Chart

Silver costs have additionally continued decrease within the aftermath of a Bearish Engulfing candlestick sample. While progress has been sluggish, costs are additionally beneath the near-term 20-day SMA. Key help appears to be the 24.628 inflection level from the February 2nd excessive. This value appears to have held persistently nicely for the reason that finish of March. Breaching this level opens the door to extending decrease.

Chart Created in Trading View

— Written by Daniel Dubrovsky, Senior Strategist for DailyFX.com