A strengthening USD, rising interest rates, low inflation and the willingness of investors to shrug off risk events at least partly explain why the gold price is under pressure. The chart above shows a clear downtrend. Traders pondering the next move for gold could turn their attention to the horizontal lines on the chart.
The recent drop takes gold through 2 important levels. The first is the thick green line at $1180. this is a long term support level from the weekly chart (not shown). The second important line is the gold level just below at $1171.63 - the 61.8% retracement of the 2016 rally.
From a technical point of view, this raises expectations of a fall to test the 7 year low at $1046. Any move down through that level could see gold below $1000 very quickly. This is not a popular view:
On the left side of the client sentiment indicator we see 83% of all CMC clients who have a position in gold are long. This is not unusual. Gold is one instrument that almost always attracts more buyers than sellers. What is unusual is the right hand side. By position size, all clients are net short, aned top clients are 51% short!
The clear implication is that at least one top client has a much larger than usual short gold position. Remembering that top clients are those who were profitable over the last three months, some of the 83% may take this as a warning.