Gold Price (XAU/USD), Chart, and Analysis

• Gold eyes a re-test of $2,000/oz.
• A bullish pennant formation, if held, suggests higher prices.

Risk market sentiment and US interest rate probabilities, both strong drivers of gold of late, are little changed so far today, leaving the precious metal stuck in a tight trading range. Market’s continue to pare back fears of a further banking crisis, while the probability for one more 25 basis point US interest rate hike is finely balanced. Financial markets also face a shortened trading week with liquidity expected to drain as we approach the Easter Bank holiday weekend, leaving the market vulnerable to potential bouts of volatility. This risk is increased with the latest US Jobs Report (NFP), a known market mover, released on Friday.

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While the fundamental backdrop for gold is currently neutral, one technical pattern on the daily chart suggests a break higher is possible in the near term. A bullish pennant pattern is formed after a period of consolidation is seen following a strong uptrend. A series of lower highs and higher lows eventually meet and, if the pattern plays out, the uptrend continues.

Pennant Patterns: Trading Bearish and Bullish Pennants

Gold is trading around $1,983/oz. currently and is within striking distance of both the $2k ‘big figure’ level and the March 2023 high at $2,009.75/oz. Above here the precious metal would be back at highs last seen over one year ago. A confirmed break above here would leave prior highs at $2,070/oz. and $2,075/oz. vulnerable.

Gold Price Daily Chart – April 4, 2023

Gold Weekly Price Chart – April 4, 2023

All Charts via TradingView

Retail Traders Increase Net-Shorts

Retail trader data show 54.75% of traders are net-long with the ratio of traders long to short at 1.21 to 1.The number of traders net-long is 3.03% lower than yesterday and 6.96% lower from last week, while the number of traders net-short is 20.05% higher than yesterday and 20.35% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

What is your view on Gold – bullish or bearish?? You can let us know via the form at the end of this piece or you can contact the author via Twitter @nickcawley1.