XAU/USD May Climb as Retail Traders Unwind Upside Bets in the Gold Price Outlook

TECHNICAL ANALYSIS, RETAIL TRADER POSITIONING, GOLD - IGCS UPDAT


Gold prices have been steadily recovering after a run of falls from early May through mid-July. Retail traders have prudently decreased their upside exposure as a result. Looking at IG Client Sentiment (IGCS) will show this. In general, IGCS serves as a contrarian indicator. Are recent adjustments in exposure suggesting that XAU/USD may be getting ready to move higher from here as a result?


Gold Sentiment Outlook - Bullish

Approximately 63% of retail traders are net long gold, according to the IGCS indicator. This suggests that prices may continue to decline in the future because the majority are still biased to the upside. However, compared to yesterday and last week, the downside exposure has grown by 18.68% and 16.94%, respectively. In light of this, recent shifts in exposure suggest that, despite general positioning, prices may revert higher.

Daily XAU/USD Chart

The crossing between the 20-day and 50-day Moving Averages (MA) on the daily chart has been bullish. This resulted in a Golden Cross, which is suggesting a technical bias to the higher in the immediate term. The Fibonacci retracement level at 1971, or 23.6%, appears to be the immediate resistance. By clearing this price, the minor 14.6% point at 2013.65 becomes visible.


If gains are extended past that level, attention will turn to the broad 2048–2081 resistance range, which is made up of highs from April and May. The 1936.90 inflection point appears to be the first line of support in the event of a shift lower. Lower clearing focuses attention on the 38.2% level at 1903.46. Late in June, this price persisted, strengthening support.