Gold: Uptrend remains intact – TD Securities
|According to analysts from TD Securities, it seems that there was long liquidation of recently accumulated relatively "weak" positions near $1,500-1475/oz and they see that there are no broad changes in hedging activity or speculative activity, suggesting that current price dynamics may not be sustainable.
Key Quotes:
“Despite little change in the macroeconomic narrative, gold has come under pressure as prices broke through key technical levels, including the uptrend channel formed from the summer lows and more recently as prices broke through $1480/oz support.”
“The combination of some 75 technical analysis trading signals suggests that 43% of signals are still tilted towards the long side in gold. In fact, chart signals in gold present the most compelling case in the cross-asset basket of securities tracked herein, with the yellow metal holding the crown for the highest absolute percentage of signals pointing long on a 60d moving average basis.”
“This lens suggests that prices are being pressured by extremely skewed positioning as the marginal chart signal prompts a herd of gold bulls to reduce their net length. However, our positioning analytics suggest that the weakness in prices is more likely to be driven by a minor shakeout in length than any major changes in positioning, given that most length is still comfortably sitting on hefty profits.”
“Overall, this suggests that these liquidations are unlikely to represent a substantial portion of the net length accumulated throughout the last year, as we estimate that the weighted average entry price for gold longs stands around $1420/oz, which remains well below current prices and is a robust support level.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.