XAU/USD May Rise with Retail Trader Short Bets Ahead of NFPs

Gold, XAU/USD, Fed, NFPs, Technical Analysis, IG Client Sentiment – Talking Points:

  • Gold prices climbed in relatively quiet day ahead of key NFP data
  • The dovish Fed consensus may keep upside XAU/USD bias for now
  • Retail trader sentiment data hints the yellow metal may rise next

Anti-fiat gold pricesaimed cautiously higher over the past 24 hours in what was a fairly quiet trading session for the yellow metal. XAU/USD capitalized on a weaker US Dollar and still-pressured Treasury yields ahead of this week’s highly-anticipated non-farm payrolls report.

Philadelphia Fed President Patrick Harker noted that it could be appropriate to slowly and carefully scale back on bond purchases at an ideal time. But, the central bank has shown persistent patience about tapering, arguing that near-term inflation forces are transitory.

Delta Fed President Robert Kaplan is slated to speak over the remaining 24 hours. He has been expressing views about tapering policy sooner than anticipated. However, he is a non-voter on the board this year. The markets may shrug off his outlook.

Rather, XAU/USD could continue trading quietly until the NFP report crosses the wires on Friday. Markets will likely be placing more emphasis on the outcome in wage data. A beat on that front could bring forward tapering bets, placing gold at risk. But in the interim, still-dovish commentary could keep XAU/USD afloat.

Gold Technical Analysis

XAU/USD is attempting to make further upside progress towards the 61.8% Fibonacci retracement at 1923.01 on the daily chart below. Keep a close eye on RSI, negative divergence may emerge. That is a sign of fading momentum which can at times precede a turn lower. This would likely place the focus on rising support from March.

XAU/USD Daily Chart

Chart Created Using TradingView

Gold Sentiment Analysis

IG Client Sentiment shows that about 74% of retail traders are net-long gold. Downside exposure has increased by 11.77% and 5.50% compared to yesterday and last week respectively. The fact traders are net-long suggests that prices may fall. But, recent changes in sentiment hint that upside momentum may continue.

Gold Price Analysis: XAU/USD May Rise with Retail Trader Short Bets Ahead of NFPs

IGCS chart used from June 2nd report

— Written by Daniel Dubrovsky, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter