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Gold and silver long bias at the extremes, oil sentiment shifts

Improved risk appetite and a stronger dollar leaves precious metals in retreat, oil finishes the week slightly higher.

Gold analysis, overview, strategies, and levels

Gold’s price was in for a rude awakening last Thursday breaking through last week’s 1st and 2nd support levels as risk appetite improved on an expected end to the US-China trade war. Yet, its price failed to recover on Friday following news to the contrary even as US equities retraced off fresh record highs. As it stands, US yields are continuing to rise, and that tends to hurt safe haven non-yielding assets like gold, with any further plummet in the bond market likely to hurt this pair’s price which stands at a short-term resistance level but where breakout strategies may be more ideal than conformist reversals and fading ones.

IG client and CoT sentiment for Gold

In sentiment, retail bias rose for the week from a majority long 63% to a now extreme long 80% - not that far off extreme long levels held by larger speculative traders as per the latest Commitment of Traders (CoT) report, who upped their long positions by 9168 lots and short by 5855 lots.

Gold chart with retail and institutional sentiment

Silver Technical analysis, overview, strategies, and levels

More so than gold, silver's price suffered heavily last week and broke through its main support levels with great ease, with its weekly outlook showing conflicting signals that while are seemingly consolidatory, combined with a trending Average Directional Index (ADX) could entice breakout strategies for the week over contrarian reversals. Its previous bull trend technical overview has shifted to a more consolidatory outlook.

IG client and CoT sentiment for Silver

Retail sentiment was at an extreme long 86% last Monday and has risen to a 91% bias at the start of this week. Meanwhile, institutional bias while still heavy long has dropped 4% as an increase in silver longs by 1,806 lots was outdone by a much larger increase in silver shorts by 7,487 lots.

Silver chart with retail and institutional sentiment

Oil WTI Technical analysis, overview, strategies, and levels

The energy commodity’s price gained slightly last week but remained relatively range-bound overall not reaching either end of its main weekly pivot points, and in line with its current consolidatory technical overview where nearly all its main technical indicators are neutral. Even a significant ‘risk-on’ theme where investors increased their risk appetite in indices didn’t translate into significant gains on Thursday. In rig count news, Baker Hughes showed yet another drop in US rig counts to 684 from 691 prior.

IG client and CoT sentiment for Oil WTI

A small bull trend line is forming while on the daily a bull trend channel, but retail sentiment has already shifted from a previous majority long 59% to a slight majority short 52%, while larger speculative traders have instead decided to up their extreme long bias from 77% to 78% on an increase in longs by 12,784 lots and a simultaneous reduction in shorts by 10,009 lots.

Oil WTI chart with retail and institutional sentiment

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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