Gold Price Prediction – Gold Breaks Out as Hedge Funds add to Long Positions

Prices break out but are now overbought
David Becker

Gold prices broke out on Tuesday during a holiday shorted session pushing through the December highs despite a stronger dollar and unchanged US yields. There was very little data to drive prices following Monday’s US Durable goods orders which was weaker than expected and a downgrade in projected US GDP by the Atlanta Fed. Riskier assets started to consolidate which helped the yellow metal continue to gain a foothold.


Trade gold with FXTM


Regulated By:CySEC, FCA, FSC

Foundation Year:2011

Headquarters:FXTM Tower, 35 Lamprou Konstantara, Kato Polemidia, 4156, Limassol, Cyprus

Min Deposit:$10

Visit Broker

90% of retail CFD accounts lose money


Technical Analysis

Gold prices broke out above the December highs near 1,486, breaking through a downward sloping trend line and is now poised to test the November highs at 1,516. Support is seen near the 50-day moving average near 1,477, which coincides with the downward sloping trend line. Additional support is seen near the 10-day moving average at 1,470. Short term momentum is reaccelerating as the fast stochastic generated a crossover buy signal. The only caveat is that the fast stochastic is printing a reading of 87, above the overbought trigger level of 80, which could foreshadow a correction.Medium-term momentum is positive as the MACD histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI (relative strength index) is accelerating higher pointing to accelerating positive momentum.

Hedge Funds Remain Long Gold

Hedge funds added their long position in futures and options according to the latest commitment of trader’s report released for the date ending December 17, 2019. According to the CFTC, managed money increased long position in futures and options by 18.5K contracts while reducing short position in futures and options by 3K contracts. Open interest that is long futures and options outnumbers open interest that is short futures and  options by a ratio of nearly 10-1. This leaves the gold market vulnerable to a long liquidation.

Don't miss a thing!
Discover what's moving the markets. Sign up for a daily update delivered to your inbox

Latest Articles

See All

Expand Your Knowledge

See All
The content provided on the website includes general news and publications, our personal analysis and opinions, and contents provided by third parties, which are intended for educational and research purposes only. It does not constitute, and should not be read as, any recommendation or advice to take any action whatsoever, including to make any investment or buy any product. When making any financial decision, you should perform your own due diligence checks, apply your own discretion and consult your competent advisors. The content of the website is not personally directed to you, and we does not take into account your financial situation or needs.The information contained in this website is not necessarily provided in real-time nor is it necessarily accurate. Prices provided herein may be provided by market makers and not by exchanges.Any trading or other financial decision you make shall be at your full responsibility, and you must not rely on any information provided through the website. FX Empire does not provide any warranty regarding any of the information contained in the website, and shall bear no responsibility for any trading losses you might incur as a result of using any information contained in the website.The website may include advertisements and other promotional contents, and FX Empire may receive compensation from third parties in connection with the content. FX Empire does not endorse any third party or recommends using any third party's services, and does not assume responsibility for your use of any such third party's website or services.FX Empire and its employees, officers, subsidiaries and associates, are not liable nor shall they be held liable for any loss or damage resulting from your use of the website or reliance on the information provided on this website.
This website includes information about cryptocurrencies, contracts for difference (CFDs) and other financial instruments, and about brokers, exchanges and other entities trading in such instruments. Both cryptocurrencies and CFDs are complex instruments and come with a high risk of losing money. You should carefully consider whether you understand how these instruments work and whether you can afford to take the high risk of losing your money.FX Empire encourages you to perform your own research before making any investment decision, and to avoid investing in any financial instrument which you do not fully understand how it works and what are the risks involved.