Gold prices suffer slight retreat as risk appetite improves

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A day lacking bad news on the banking front combined with relatively positive outlooks from a couple of companies in the US aided risk appetite with the stock market ending higher. For the safe haven metal, it was a slight retreat by the close even as the greenback – which gold is priced against – relatively underperformed in the FX market.

As for Treasury yields, they finished the session little changed and unchanged in real terms, and breakeven inflation rates were slightly higher. Market pricing (Refinitiv) for future rate action out of the US Federal Reserve (Fed) is showing it's still in the middle on whether there will be a final 25 basis point (bp) rate hike from their May meeting, and via majority still pricing rate cuts end of this year opposite Fed expectations that this year will be lacking one.

There was relatively little on offer out of the US in terms of economic data, the weekly mortgage applications out of MBA showing a 2.9% increase, and pending home sales for the month of February were up 0.8% month-on-month (m/m) opposite expectations of decline and taking the year-on-year (y/y) reading from -24.1% to -21.1%.

The final fourth quarter GDP (Gross Domestic Product) will be released later today with the weekly unemployment claims, and expect tomorrow to be more impacting with PCE (Personal Consumption Expenditures) pricing data, personal spending and income, and UoM's (University of Michigan) revised figures on consumer sentiment and inflation expectations.

Gold technical analysis, overview, strategies, and levels

Calmer moves yesterday for gold prices that lacked a play for conformists and contrarian strategies, early this morning getting past its previous 1st Support level with little on offer for both conformist sell-breakouts and contrarian buy-after reversals.

There’s a bit of a technical triangle forming on the daily time frame meaning a breakout under a volatile overview usually translates into further caution for those opting to go opposite (i.e., contrarians) should it occur.

IG client* and CoT** sentiment for Gold

In sentiment, it’s still majority buy amongst retail traders and unchanged at 59%, with CoT speculators as per last Friday’s report showing positioning rising and not far off extreme long territory.

Retail traders hold a larger buy bias in the other precious metals: Silver at 82%, platinum at 86%, and palladium the highest 94%. But CoT speculators aren’t as convinced: silver only slight buy 52%, platinum majority long at 62%, and palladium an opposite extreme sell 84%.

Gold chart with retail and institutional sentiment

*The percentage of IG client accounts with positions in this market that are currently long or short. Calculated to the nearest 1%, as of today morning 8am for the outer circle. Inner circle is from the previous trading day.
**CoT sentiment taken from the CFTC’s Commitment of Traders report, outer circle is latest report released on Friday with the positions as of last Tuesday, inner circle from the report prior.