Gold, XAU/USD, University of Michigan Sentiment, IGCS, Technical Analysis – Talking Points:
- Gold prices aimed slightly higher, attempting to recover prior flash crash
- Softer University of Michigan Sentiment data could offer XAU/USD upside
- Retail traders reduced upside gold exposure, IGCS hints prices may rise
Anti-fiat gold prices aimed cautiously higher on Thursday, albeit price action was fairly restrained. The yellow metal still finds itself slowly recovering from the flash crash at the onset of the week. Treasury yields rose, but the US Dollar remained fairly restrained. XAU/USD likely capitalized more so on price action in the latter than from the former.
Looking at the remaining 24 hours of the week, gold is turning to University of Michigan Sentiment data after a fairly quiet Asia Pacific trading session. According to the Citi Economic Surprise Index, economists are now tending to overestimate the health and vigor of the economy. That could open the door to a softer-than-expected report. If such an outcome dents US bond yields, then gold could continue on its slow and steady push higher.
Check out the DailyFX Economic Calendar for more key events!
Gold Technical Analysis
XAU/USD appears to have confirmed a bullish Morning Star candlestick pattern on the daily chart below. That could hint at further gains to come in the coming sessions. However, keep in mind that a bearish ‘Death Cross’ is still in play between the 20- and 50-day Simple Moving Averages (SMAs). These could reinstate the dominant focus to the downside as key resistance points.
XAU/USD Daily Chart
Gold Sentiment Analysis
According to IG Client Sentiment (IGCS), about 72% of retail traders are net-long gold. Upside exposure has decreased by 1.55% and 7.15% over a daily and weekly basis respectively. We typically take a contrarian view to crowd sentiment. The fact that most traders are net-long hints prices may continue falling. However, recent shifts in sentiment now warn that the price trend may soon reverse higher.
*IGCS chart used from August 13th report
–— Written by Daniel Dubrovsky, Strategist for DailyFX.com
To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter