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David Becker

Gold prices broke down through support levels on Monday as riskier assets sold off, but the dollar receive a safe haven bid as opposed to the yellow metal. The dollar rallied 0.7% despite a declined in US yields, as stocks sold off hard. Bejing compiled a list of companies that could not work in China in retaliation for the commentary from the White House about TikTok. Hedge fund traders continued to add to long position in futures and options according to the latest commitment of traders report.

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Technical analysis

Gold prices moved broke down on Monday pushing through support which is now resistance near the 50-day moving average at 1,937. Target support is the August lows at 1,862. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (the 9-day moving average of the MACD line). Short-term momentum is flat to negative as the fast stochastic recently generated a crossover sell signal. The relative strength index is moving lower reflecting accelerating negative momentum.

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Hedge Funds add to Long Positions

According to the latest commitment of traders report released for the date ending September 15, 2020, managed money increased long position in futures and options by 12K contracts while increasing short-positions by 2.3K contracts. Open interest that is long in the managed money space outnumbers open interest that is short by 5 to 1.

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