CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Oil plummets as more enter lockdown, gold oscillates

Markets expected to be volatile this week given fundamental events, CoT bias extreme buy for both oil and gold.

Gold Technical analysis, overview, strategies, and levels

Volatility has started to rise for gold prices, testing short-term levels with ease and aiding breakout strategies on both Daily and Weekly levels last week. US yields have been rising, the greenback strengthening at times when the 'sell everything' mood prevails, and equities have been in some retreat which under normal circumstances would be positive for safe haven, but when used as a hedge would make the movement more correlated. Its technical triangle on the Daily broke at last offering another bout of volatility, and big fundamental events this week are likely to keep prices volatile. A retreat in gold prices has meant silver underperformed, the gold/silver ratio briefly making it into the 80s.

IG client* and CoT** sentiment for Gold

As for sentiment, retail bias is still extreme buy and up a notch since the start of last week, while CoT speculators have repositioned by reducing both short and long positions by over 10K lots each, failing to take sentiment out of extreme buy territory.

Gold chart with retail and institutional sentiment

Oil WTI Technical analysis, overview, strategies, and levels

The increased volatility in oil prices meant Daily conformist breakout strategies were outperforming last week, with a break in its Weekly 1st Support level as lockdown news and increased restrictions took its toll on the energy commodity. Earnings from energy giants showed ExxonMobil and Chevron reduce spending, the latter managing to post a small profit and the former preserving its dividend despite a third consecutive quarter of losses. Shell raised dividends as profit beat expectations, and BP announced a dividend for the quarter. In oil data, Baker Hughes oil rig count showed another increase, to 221 from 211, a theme unlikely to persist if we continue to experience falling oil prices. The overview while usually consolidatory for the Weekly could experience more volatility given policy differences ahead of the elections, as well as rising coronavirus cases.

Learn more about oil trading.

IG client* and CoT** sentiment for Oil WTI

Both retail and CoT traders holding majority buy bias, the latter still at extreme levels.

Oil WTI 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.

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