Matt Simpson, CFTe, MSTA
CityIndex
A dovish ECB propelled gold to a 2-week high and closed on a key resistance level, suggesting bulls are preparing to break gold from its corrective channel.
Gold has rallied an impressive 17% this year so far, although at its peak in September it was over 21% higher. Prices have since retraced, provided a failed head and shoulders top and is now carving out a bearish channel. Yet perhaps it has another plan ups its sleeve, given it closed right on the upper trendline after printing a higher low.
A break higher would be a victory for gold bugs, although it's up for debate as to whether it can break to new YTD highs given net-long exposure has stopped just shy of a record high in late September. Sure, bulls have reduced their exposure by -19k contracts these past three weeks reduce the probability of a sentiment extreme, yet bullish exposure still remains high by historical standards. Therefore, I’m erring on the side of caution to suggest that a breakout from the channel may not necessarily lead to a breakout to new highs. For that, we’d probably need a dovish cut from the Fed next week and for global economic data and trade talks deteriorate further. If that does happen, then hold on as it could well be the beginning of the next leg higher.
CFD and forex trading are leveraged products and can result in losses that exceed your deposits. They may not be suitable for everyone. Ensure you fully understand the risks. From time to time, City Index Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material. As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed
Recommended Content
Editors’ Picks
EUR/USD marks yearly lows near 1.0550 ahead of Eurozone Q3 GDP, US PPI
EUR/USD extends its decline for the fifth consecutive day, trading near 1.0550, marking fresh yearly lows during Thursday's Asian session. This downside of the pair is mainly attributed to the strengthening US Dollar, driven by "Trump trades."
GBP/USD extends downside below 1.2700 ahead of BoE's Bailey speech
The GBP/USD pair extends the decline to near 1.2685 during the Asian trading hours on Thursday. A rally in the US Dollar to the highest level since November 2023 weighs on the major pair. The Bank of England Governor Andrew Bailey is set to speak later on Thursday.
Gold price languishes near two-month low on bullish USD, elevated US bond yields
Gold price remains under heavy selling pressure amid the continuation of the Trump trade. The optimism over stronger US economic growth lifts the USD to a fresh YTD top on Thursday. Rising US bond yields also contribute to driving flows away from the non-yielding yellow metal.
XRP's open interest drops over 10% amid struggles near $0.7440 resistance
Ripple's XRP is trading near $0.6900, down nearly 3% on Wednesday, as declining open interest could extend its price correction. However, other on-chain metrics point to a long-term bullish setup.
Trump vs CPI
US CPI for October was exactly in line with expectations. The headline rate of CPI rose to 2.6% YoY from 2.4% YoY in September. The core rate remained steady at 3.3%. The detail of the report shows that the shelter index rose by 0.4% on the month, which accounted for 50% of the increase in all items on a monthly basis.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.