Gold buyers could see $1900 as a bargain
Gold futures have fallen nearly 9% since the May high, but there are signs that it is trying to form a base around $1900.Whilst the psychological round number has helped to play a part, it also coincides with a volume cluster in the rally at the beginning of March. We therefore see the potential for a minor bounce at a minimum from current levels whilst prices hold above $1900.
Large speculators remain net-long, although their exposure has been trimmed as prices have fallen. Yet we're not seeing a material pickup in gross-short exposure to indicate a much more bearish outlook from speculators.
Furthermore, softer US inflation data on Friday weighed on the US dollar and helped to support gold - and gold could rise further if we see any weakness in data this week (ISM manufacturing data is out today, challenger jobs and ADP employment on Thursday and of course Nonfarm payroll on Friday).
The highs around $1948 are the initial target for bulls to consider, with the potential for a move towards $2000 if we're treated with a host of weak US data to prompt further calls for the Fed's terminal rate.
A break below $1900 invalidates the near-term bullish bias.
Large speculators remain net-long, although their exposure has been trimmed as prices have fallen. Yet we're not seeing a material pickup in gross-short exposure to indicate a much more bearish outlook from speculators.
Furthermore, softer US inflation data on Friday weighed on the US dollar and helped to support gold - and gold could rise further if we see any weakness in data this week (ISM manufacturing data is out today, challenger jobs and ADP employment on Thursday and of course Nonfarm payroll on Friday).
The highs around $1948 are the initial target for bulls to consider, with the potential for a move towards $2000 if we're treated with a host of weak US data to prompt further calls for the Fed's terminal rate.
A break below $1900 invalidates the near-term bullish bias.
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So far so good. And it now looks like it is considering its next leg higher towards the $1985 highs / $2000 area.