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Gold Price Prediction – Prices Flash Crash and Rebound But Remain Lower
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The dollar continues to rally
Gold prices experienced an extreme flash crash of $86 per ounce during the Asian trading session and rebounded during European and North American hours but were still down on the trading session. The dollar moved higher, putting downward pressure on the yellow metal as Treasury yields continued to rise. There continued to be a move out of precious metals and into cryptocurrencies. Hedge funds added to long and short positions in futures and options
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Technical analysis
Gold prices tumbled sharply but rebounded from a flash crash. Target support is seen near the March lows at 1,677. Resistance is seen near former support at the June lows at 1,750. Short-term momentum has turned negative as the fast stochastic generated crossover sell signal. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) 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).
Hedge Funds Barely Change Positions
According to the latest Commitment of Trader’s Report released by the CFTC, for the date ending 8/3/21, hedge funds added to both long and short positions in futures and options. Managed money open interest that is long futures and options is more than 3-times the volume that is short, which likely led to a string of stop losses that generated the flash crash in gold prices.
About the Author
David Beckerauthor
David Becker focuses his attention on various consulting and portfolio management activities at Fortuity LLC, where he currently provides oversight for a multimillion-dollar portfolio consisting of commodities, debt, equities, real estate, and more.
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