Gold prices rose on Tuesday as the dollar weakened. Speculative positions in the precious metals market have significantly reduced the bearish trend in recent weeks. Because hedge funds mostly closed their short bets. However, the market is still not attracting enough bulls attention for a sustained rally.
“US dollar likely to put pressure on gold prices”
Gold continues to hold solid gains above several-year lows. Some analysts say gold will continue to struggle as the Federal Reserve maintains its aggressive monetary policy stance. Markets expect the Fed to slow to a 50 basis point increase next month. However, the goal of increasing the final rate above 5% remains firmly in place. Commodities analysts at CPM Group comment:
Economic conditions in the US are comparatively healthier than in most other major regions of the world. It is possible that this could provide support for the US dollar. As a result, this is likely to put pressure on gold prices in the short term. We advise investors to remain neutral on gold in the near term.
Bull position below at three-month high
Some analysts say that the latest data from the Commodity Futures Trading Commission (CFTC) shows that sentiment is improving below. However, they note that more needs to be done to create a sustainable uptrend.
The CFTC’s disaggregated Commitments of Traders report for the week ended November 15 showed that money managers increased their speculative gross long positions in Comex gold futures by 7,006 contracts to 95,065. At the same time, shorts fell by 34,797 contracts to 69,608. The gold market is currently trading in a net long position with 25,457 contracts. Thus, the bullish position reaches a three-month high.
“Gold prices focus on $1,735 support before $1,720”
During the survey period, gold prices hit a three-month high at $1,791.80. However, prices have since dropped below $1,750. So it looks like the short squeeze is running its course. Ole Hasen, head of commodity strategy at Sax Bank, highlights the following levels:
Gold failed to climb above the key resistance in the $1,800 zone. Also, the yellow metal is currently focused on the $1,735 support before $1,720. All this forced the precious metal into a decline.
TDS expects gold prices to be lower
Despite the improving bullish position in the market, commodity analysts at TD Securities expect prices to be lower by the end of the year. Analysts comment:
The aggressive increase in net position is more likely due to weakening signs of bearish momentum, contrary to growing belief in the Fed pivot narrative. Indeed, money managers have significantly closed short positions. However, they only modestly added to their long positions. Given that non-CTA money managers are also likely to be net shorts, this recently popular narrative may have also played a role in explaining the scale of shorting in this week’s data.
“These are possible catalysts for gold’s next big moves”
According to Exinity chief market analyst Han Tan, the slowing recovery in the US dollar gives spot gold a chance to find a firmer footing around mid $1,700 for now. The analyst continues his statements as follows:
If the Fed hawks kick in again and disrupt the ‘pivot’ narrative once again, it’s possible that this will cause spot gold to further slacken its recent gains to test support below $1,700. US nonfarm payrolls and inflation data before the December Fed meeting are likely catalysts for gold’s next big moves.
Gold bulls, are they really relaxed?
By the way, cryptocoin.comAs you follow, Cleveland Fed President Loretta Mester made a statement on Monday. Mester said the Federal Reserve is likely to switch to smaller rate hikes starting next month. Phillip Futures analyst Avtar Sandu highlights in a note:
With Mester’s words of dove, the golden bulls were relieved.
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