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XAUUSD Investors Reduce Short Positions in the Asset

10/25/2022 12:40 PM

The XAU/USD pair is correcting in a downtrend at 1649.0.

The situation on the gold market remains uncertain: also to the spot price, which is more dependent on momentary fluctuations in the US dollar, in which gold is denominated, the determining factor for the direction of the instrument’s movement is statistics from leading importers and data on demand from investors.

Yesterday, investors followed the statistics from China, which reflected one of the reasons for the recent decline in metal quotes: the consequences of the fight against new outbreaks of COVID-19 led to a reduction in imports to 0.3% with an expected growth of 1.0% and retail sales from 5.4% to 2.5%. However, if we evaluate the economic growth in the third quarter by 3.9% and the volume of industrial production, adjusted by 6.3% instead of 4.2% earlier, we can assume that the demand for gold will increase in the next quarter, which is certainly, will also affect the dynamics of the XAU/USD pair.

As for the demand for the metal on the part of investors, the continued fixation of short positions is seen. According to the latest report from the US Commodity Futures Trading Commission (CFTC), last week in swap dealer positions, sellers liquidated 7,733K deals, while buyers increased the number of contracts to 1,161K, which indicates the ongoing balancing of supply and demand.

The daily chart shows the trading instrument is in a downwards channel, approaching the resistance line.

Technical indicators keep a sell signal, which does not rule out a local correction: fast EMAs on the Alligator indicator is kept below the signal line, and the AO oscillator histogram forms rising bars in the sell zone.

Resistance levels: 1670.0, 1726.0. | Support levels: 1622.0, 1580.0.

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