The US dollar has taken a severe swing lower after the release of the US Jobs Report on November 4th, losing more than 6% of its value and returning to levels last seen three months ago. As the US unemployment rate ticks up and inflation starts to decrease, albeit from a blistering rate, the markets now anticipate the Federal Reserve to take its foot off the gas and raise rates by 50 basis points in December. With traders previously holding a sizable long position in the US dollar, market positioning may have also given the drop additional momentum.
Gold has increased by nearly 10% in November on a low-to-high basis, reversing three months of falls. As was already said, the US dollar's weakening has provided gold leeway to strengthen, and the next move for the precious metal will continue to be determined by the USD. The big figure level of $1,800/oz, the 200-day SMA at $1,804/oz, and the previous horizontal level of support turned resistance at $1,807/oz all act as technical barriers to any upward movement. This level may be tested by gold, but further US dollar weakening is necessary for it to be decisively broken.
According to data from retail traders, 2.31 traders for every 1 short trader means that 69.76% of traders are net long. While the number of traders who are net-long has increased by 1.43% from yesterday and has decreased by 14.76% from the previous week, the number of traders who are net-short has increased by 9.98% from yesterday and has increased by 15.18% from the previous week.
The fact that traders are net-long signals that gold prices may continue to decline. This is contrary to how we usually think, which is contrarian. However, compared to last week and yesterday, traders are less net-long. The present Gold price trend may shortly reverse higher, according to recent shifts in sentiment, even if traders are still in the buying trend.
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