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XAUUSD Reduce positions in the Asset

10/19/2022 12:34 PM

The XAU/USD pair is correcting in a downtrend at 1646.0.

The situation on the gold market is still ambiguous: historically, the precious metal has always been a refuge in case of geopolitical tensions, but at the moment, its quotes are under pressure from high interest rates and, as a result, a growing dollar. The hawkish monetary policy provokes an increase in government bonds yield, which are more reliable than gold, and high rates (4% on 10-year bonds) additionally attract investor capital into bonds. Also, since the price of gold is denominated in dollars, the latter's growth will always make the metal cheaper, which is now observed.

The situation has also changed in demand for contracts among investors: according to the latest report of the US Commodity Futures Trading Commission (CFTC), last week, the number of positions on the trading instrument increased and amounted to 94.4K instead of 88.4K a week earlier, but buyers began to reduce their positions: in the structure of the portfolio of manufacturers, the decrease in long positions amounted to 646 contracts, while in short positions, on the contrary, an increase was observed by 443 contracts, which has not happened for four weeks. It may indicate either that the global position of buyers has already been recruited or that they have decided to suspend purchases.

On the daily chart of the asset, the price is moving in a downward channel, approaching the support line.

Technical indicators maintain an increasing sell signal: fast EMAs on the Alligator indicator are moving away from the signal line, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 1672.0, 1730.0. | Support levels: 1620.0, 1570.0.

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