Gold starts the week on the front foot after testing $2k support in the last couple of sessions. The precious metal continues to respect this level. With little high-impact economic data on the calendar this week, traders will look to commentary from a host of Federal Reserve speakers to provide some volatility. Today sees scheduled reports from Fed members Bostic, Kashkari, Barkin, and Cook, while other board members speak throughout the week. The week’s highlight is Friday, when Fed chair Jerome Powell is scheduled to speak at the Thomas Laubach Research Conference. According to the Fed’s website, this year’s conference will ‘highlight critical issues in monetary policy and the economy and facilitate discussions on economic policymakers’ challenges.
US Treasury traders will closely follow this week’s Fed commentary for clues about the central bank’s intentions in the future. According to one closely watched indicator, the Fed has finished tightening monetary policy and will start cutting interest rates at the end of the third quarter. This outlook is at odds with more hawkish Fed members who continue to press their case for further rate hikes in the months ahead. The rate-sensitive US 2-year is currently trading with a yield of 4%, while the benchmark US 10-year changes at 3.48%.
The precious metal remains bid above $2,000/oz. level and is looking to break back above Friday’s $2,022/oz. high. While support has held, a recent series of lower highs has compressed the price of gold, hinting at a breakout. The 20-day simple moving average supports gold, although this indicator remains under threat. Suppose the 20-DMA and the $2k level break, a cluster of prior lows is down to $1,970/oz. should provide support.
RETAIL TRADERS’ POSITIONING LITTLE CHANGED
Retail trader data show 58.03% of traders are net-long, with the ratio of traders long to short at 1.38 to 1. The number of traders net-long is 0.94% higher than yesterday and 4.42% higher than last week, while the number of traders net-short is 1.09% lower than yesterday and 4.99% lower than last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests 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 more substantial Gold-bearish contrarian trading bias.