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CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money. CFDs are complex financial instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

A strong finish for the week for gold, silver, and oil

A busy week for gold as central bank heavyweights meet, as USD-related pairs set to get affected.

Gold Source: Bloomberg

The latest in Gold:

The US dollar outperformed last week besting most of the FX majors, yet when taken into context currencies in general have been declining against gold (and silver) which ended the week higher, and a part of that may be due to central bank easing which was confirmed by the European Central Bank last week, and where the US Federal Reserve (Fed) may cut rates this week.

Gold Technical analysis, overview, strategies, and levels

Therefore, while the overview is consolidatory, volatility is expected from the three central bank announcements this week and the effect it’ll have on the non-yielding precious metal.

Current Technical Overview Consolidation - Volatile
Technical Overview Conformist Strategies Buy 1st Resistance Upon Breakout From Below, Sell 1st Support Upon Breakout From Above
Technical Overview Contrarian Strategies Sell 1st Resistance After Reversal, Buy 1st Support After Reversal
S/L for 2nd Resistance 1560.9
2nd Resistance 1549.6
S/L for 1st Resistance 1538.3
1st Resistance 1527.1
Relative Starting Point 1504.5
1st Support 1482.0
S/L for 1st Support 1470.7
2nd Support 1459.4
S/L for 2nd Support 1448.1

IG client and CoT sentiment for Gold

Both retail and institutional bias remains heavy to the long side, but retail longs have been enticed into taking some profit and reducing the bias lower to 67% while CoT (Commitment of Trader) bias has risen a notch to an extreme long 84% on an increase in long positions by 3,547 lots and a simultaneous reduction in shorts by 2,558 lots.

Gold sentiment Source: IG charts
Gold sentiment Source: IG charts

Gold chart with retail and institutional sentiment

Gold Source: IG charts
Gold Source: IG charts

Silver Technical analysis, overview, strategies, and levels

A strong finish last week thanks to the gains made towards the end of the week, as both gold and silver finished higher and, in this case, infusing its technicals with more positive bias. But given it’s the Fed's decision and plenty of uncertainty going into the event, contrarian breakout strategies may be more ideal on an expected increase in volatility, as gold and silver (and any USD-related pair) are likelier to experience heavy movement.

Current Technical Overview Consolidation - Volatile
Technical Overview Conformist Strategies Buy 1st Resistance Upon Breakout From Below, Sell 1st Support Upon Breakout From Above
Technical Overview Contrarian Strategies Sell 1st Resistance After Reversal, Buy 1st Support After Reversal
S/L for 2nd Resistance 19.03
2nd Resistance 18.03
S/L for 1st Resistance 18.63
1st Resistance 18.43
Relative Starting Point 18.04
1st Support 17.64
S/L for 1st Support 17.44
2nd Support 17.25
S/L for 2nd Support 17.05

IG client and CoT sentiment for Silver

As with gold, retail longs have been taking some profit on the gains, dropping a notch but still in extreme long territory, while CoT bias rises anticipating further gains, with the increase in silver long positioning by 4,659 lots outdoing a smaller increase in silver shorts by 1,905 lots.

Silver sentiment Source: IG charts
Silver sentiment Source: IG charts

Silver chart with retail and institutional sentiment

Silver Source: IG charts
Silver Source: IG charts

Oil Technical analysis, overview, strategies, and levels

It’s been a more positive week for oil, ending Friday night higher following a plummet in Baker Hughes’ US oil rig count plummeting to 696 from 713 prior, and where its price finished higher crossing back above its 50-week moving averages. However, while expectations for volatility conforming to breakout strategies, there’s been a clear lack of follow through following its breach of last week’s (weekly) 1st Resistance level.

Current Technical Overview Consolidation
Technical Overview Conformist Strategies Sell 1st Resistance After Reversal, Buy 1st Support After Reversal
Technical Overview Contrarian Strategies Buy 1st Resistance Upon Breakout From Below, Sell 1st Support Upon Breakout From Above
S/L for 2nd Resistance 63.33
2nd Resistance 62.00
S/L for 1st Resistance 60.66
1st Resistance 59.33
Relative Starting Point 56.66
1st Support 53.99
S/L for 1st Support 52.66
2nd Support 51.32
S/L for 2nd Support 49.99

IG client and CoT sentiment for Oil

Profit-taking amongst retail longs have been massive, as the start of last week’s 79% extreme long bias has been reduced to a more modest majority long 56% at the start of this week, while institutional bias is unchanged at a heavy long 75%.

Oil sentiment Source: IG charts
Oil sentiment Source: IG charts

Oil chart with retail and institutional sentiment

Oil Source: IG charts
Oil Source: IG charts
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