Gold Looks Limited to $1,790

Monday’s uptick in gold prices was amidst shrinking open interest and volume, which is indicative that a probable corrective downside could be shaping up in the very near term. So far, price action in the yellow metal looks limited by the $1,790 mark per ounce troy.

Open interest in gold futures markets shrank for the second session in a row on Monday, this time by more than 4K contracts according to advanced prints from CME Group. In the same line, volume dropped for the third consecutive session, now by around 10.5K contracts.

Retail trader data show 84.40% of traders are net-long with the ratio of traders long to short at 5.41 to 1. The number of traders net-long is 0.11% higher than yesterday and 15.11% lower from last week, while the number of traders net-short is 4.85% higher than yesterday and 29.88% higher from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests Gold prices may continue to fall. Yet traders are less net-long than yesterday and compared with last week. Recent changes in sentiment warn that the current Gold price trend may soon reverse higher despite the fact traders remain net-long.

Gold Looks Limited to $1,790 via @goldsilverrepor
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