Gold has started to rebound higher after finding support around the $1,930 level, still the price of gold is set for a negative monthly close as the yellow metal looked toppy around the $2,000 level.
In the bigger picture, the view on gold remains very optimistic, with 71% of respondents saying global central bank gold holdings would rise in the next twelve months compared to 61% last year.
But there is also a growing divide in how the emerging market and developing economies think about gold allocation versus the advanced economies, the survey pointed out.
When asked about gold’s future share in global reserves, 68% of EMDE respondents saw gold’s share rising compared to 38% of advanced economy respondents. A small proportion of EMDE central banks even said they saw gold’s share of reserves rising above 25% – a major shift from last year’s results, with zero respondents indicating that.
On top of that, EMDE central banks, the primary gold buyers since the 2008 global financial crisis, are also more pessimistic about the future of the US dollar. Fifty-eight percent of EMDE respondents believe the US dollar’s share of global reserves will drop versus only 46% of advanced economy respondents stating that.
Technically, the price of gold has returned back above the $1,950 level. In fact it is very visible that gold has in fact struggled to move above $2,000, which is a really bad sign for gold bulls.
Going forward, it’s imperative that gold price move back above $2,000 or else we could see a steep drop back to the $1,930 support zone again in the coming days and weeks.
Current sentiment metric towards gold shows that hints that this current price action is probably bearish, and a stepper correction is likely to happen as the sentiment bias is not that severe.
The ActivTrader market sentiment tool shows that just 47 percent of traders are bullish towards gold. Going forward, we really need to see a much strong negative bias by retail to help the chances of a sustained rally.
Gold short-term Technical Analysis
According to technical analysis gold the price of gold has moved below the Ichimoku Cloud, meaning that the short-term price trend remains very bearish below the $2,000 level.
It is also noteworthy that gold has ignited a bearish rising wedge price pattern and therefore and still has tremendous scope to move into a much lower trading range in future.
Gold Medium-term Technical Analysis
The daily chart shows that the yellow metal holds under the $2,000 level and this can cause another move towards $1,900. Below $1,930 there is no support until $1,825.
Gold could explode above the $2,070 level and then the $2,100 level if we see the price rise back above the notable wedge pattern breakout that took place last week.
