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David Becker
Pile of gold bars or ingots on a dark background

Gold prices moved lower as the dollar gained traction and US yields headed higher. The US payroll report on Friday did little to change investors’ minds about the Fed but the softer than expected investors sentiment in Europe put downward pressure on the Euro. This paved the way for higher gold prices. Hedge funds dumped long positions position in futures and options according to the most recent commitment of trader’s report released the for the date ending October 1, 2019. According to the CFTC hedge funds reduced their position by 17% dropping 54K contracts. Managed money is still long 254K contracts compared to short 19K which still leaves the market vulnerable to a long liquidation.

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Technical Analysis

Gold prices declined 0.9% on Monday, slipping through support near the 10-day moving average which is now seen as short term resistance at 1,498. Support is seen near an upward sloping trend line that comes in near 1,464. The 100-day moving average is target support near 1,443. Short term momentum has whipsawed and now points to consolidation. Medium-term momentum is beginning to consolidate. The MACD histogram is printing in the red with an upward sloping trajectory which points to consolidation, but also a potential crossover buy signal.

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European Sentiment is Subdued

Europe continues to experience depressing economic news. The Sentix investor sentiment index fell by 16.8, the lowest since mid-2013.  In Addition, Germany’s August factory orders was also disappointed, contracting -6.7% year over year versus expectations that it would come in at -6.4% expected.  ECB’s Austrian General Council member Holzmann came out with more criticism of negative rates but the doves are in control and this remain the same when Lagarde takes the reigns.

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