Gold Prices Post Breakout of Downtrend from 2019 Peak

Gold Price Analysis and Talking Points:

• Gold Prices Edging Lower Since FOMC, Eyes on NFP

• Trade War Latest: Trump Looking at Additional Tariffs

See our quarterly gold forecast to learn what will drive prices throughout Q2!

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ld Prices Post Breakout of Downtrend from 2019 Peak

Gold prices continued to edge higher in the wake of the escalation of the US/China trade war with China announcing its retaliation (full story), which in turn saw the precious metal make a slight break above the psychological $1300 level, as we had noted last week (full story) persistent risk aversion was likely to underpin gold prices and potentially spark a breakout. This was indeed what happened as gold broke through the descending trendline from the 2019 peak at $1290. Topside resistance now situated at $1309-11, in which a break through raises the risk of a move towards the 76.4% Fibonacci retracement at $1317. However, failure to make a breach through topside resistance could see the precious metal make a return to $1290.

Trade War Latest: Trump Looking at Additional Tariffs

Overnight, the USTR office had posted details of tariffs on the approximate remaining $300bln of Chinese goods and will hold a public hearing on June 17th with President Trump stating that he had not made a decision whether to go ahead with tariffs on further Chinese goods. Of course, a further escalation could keep gold prices buoyed in the near-term.

IG Client Positioning | Clients Raises Net Long Gold Positioning

Trader data shows 72.4% of traders are net-long with the ratio of traders long to short at 2.62 to 1. The number of traders net-long is 4.3% lower than yesterday and 7.3% lower from last week, while the number of traders net-short is 6.6% lower than yesterday and 2.0% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Spot Gold prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger Spot Gold-bearish contrarian trading bias.

GOLD PRICE CHART: Daily Time-Frame (Nov 2017-May 2019)

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