Gold prices are under pressure as recent US Treasury auctions saw weak demand, leading to a sharp rise in yields. The auction of 2-, 5-, and 7-year US Treasuries, totaling $183 billion, resulted in higher yields as dealers and investors demanded better returns. This surge in yields, combined with growing expectations that the Federal Reserve may only implement a single interest rate cut this year, has strengthened the US dollar and negatively impacted the commodity market.
Key economic data releases are on the horizon that could further influence gold prices. The US Bureau of Economic Analysis (BEA) will release its second estimate of Q1 GDP at 13:30 UK time today, followed by the Core PCE Price Index for April on Friday. The Core PCE is the Federal Reserve’s preferred inflation measure, and both reports have the potential to significantly impact gold prices.
After reaching a multi-decade high of $2,450 per ounce last week, gold has retreated and is currently trading around $2,333 per ounce. Technical analysis of the daily chart indicates that the 23.6% Fibonacci retracement level at $2,284 per ounce, along with a prior swing low at $2,281 per ounce, should offer support in the event of further short-term selling. A decisive break below these levels could shift focus to $2,200 per ounce and the 38.2% Fibonacci retracement level at $2,193 per ounce.
Retail trading data reveals that 60.78% of traders are net-long on gold, with a long-to-short ratio of 1.55 to 1. The number of traders net-long has decreased by 4.66% since yesterday but is up by 18.87% from last week. Conversely, the number of traders net-short is marginally lower, down 0.04% from yesterday and 1.85% from last week.
Typically, a contrarian approach to crowd sentiment is taken, suggesting that the predominance of net-long positions could indicate further declines in gold prices. The current sentiment and recent shifts present a mixed outlook for gold trading, with positioning being less net-long compared to yesterday but more net-long relative to last week.
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