Skip to content

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. 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 instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.

Gold price setup: Can stretched long positioning in XAU/USD trump technicals?

XAU/USD remains above vital support despite the jump in US Treasury yields; retail traders’ long positioning looks stretched and what is the outlook and key levels to watch in XAU/USD?

Source: Bloomberg

Gold, XAU/USD: Price action & sentiment

Gold is at a critical juncture - stretched retail traders’ long positioning poses downside risks to XAU/USD. However, if the past is any guide, the yellow metal may not be ripe for a bearish break just yet.

The IG client sentiment (IGCS) chart

Source: DailyFX

The IG Client Sentiment (IGCS) shows 72% of retail traders are net-long with the ratio of long to short at 2.6 to 1. The number of traders net-long is 6.4% higher from last week. The IGCS data at times functions as a contrarian indicator – the fact traders are net-long suggests gold may continue to fall.

XAU/USD daily chart

Source: TradingView

The technical setup remains broadly unchanged from the previous update.

On the daily chart, gold remains above quite a strong cushion around 1930, including an uptrend line from the end of 2022, the 89-day moving average, and the lower edge of the Ichimoku cloud. The colour-coded candlestick daily charts show the current trend is a consolidation within the overall bullish structure.

XAU/USD 240-minute chart

Source: TradingView

Interestingly, the 14-day Relative Strength Index (RSI) is attempting to form a base – the previous retreat earlier this year terminated with a similar setup (see the daily chart). For a material rebound to occur this time around, XAU/USD would need to clear the immediate ceiling around 1980-1987 (including the 200-period moving average on the 240-minute chart and Friday’s high).

XAU/USD 240-minute chart

Source: TradingView

Until then, the bearish setup on smaller and higher timeframes could dominate. The 240-minute colour-coded candlestick charts show XAU/USD remains in a broadly bearish phase.

XAU/USD daily chart

Source: TradingView

Any break above 1980-1987 could expose upside scenarios toward 2020 or even 2048. On the downside, a decisive break under 1930 could open the door toward the 200-day moving average (now at about 1840).

XAU/USD monthly chart

Source: TradingView

*Note: In the above colour-coded chart, blue candles represent a Bullish phase. Red candles represent a Bearish phase. Grey candles serve as Consolidation phases (within a Bullish or a Bearish phase), but sometimes they tend to form at the end of a trend. Note: Candle colors are not predictive – they merely state what the current trend is. Indeed, the candle color can change in the next bar. False patterns can occur around the 200-period moving average, or around a support/resistance and/or in sideways/choppy market. The author does not guarantee the accuracy of the information. Past performance is not indicative of future performance. Users of the information do so at their own risk.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa 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.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Monday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

You might be interested in…

<h3>How much does trading cost?</h3>
<h3>Find out about IG</h3>
<h3>Plan your trading</h3>

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.