Gold Price Forecast: Gold Bulls Face Significant Hurdle, Brainard Bullish for Gold


Gold Price Analysis and News

  • Gold Underpinned as Odds of Brainard Becoming Fed Chair Increase
  • Gold Bulls Face Significant Hurdle
  • IG Client Sentiment: Positioning Changes Could See Gold Reverse Higher

Gold Underpinned as Odds of Brainard Becoming Fed Chair Increase

Gold is once again back at familiar resistance as the latest uptick stems from rising odds of Fed’s Brainard becoming the next Fed Chair. A reminder that in light of last week’s reports of Fed’s Powell and Brainard meeting Biden at the White House, gold closed at its highest level in two months. While overnight, source reports noted that Brainard had been interviewed for the Fed Chair position and thus keeping the precious metal elevated. That being said, given that Brainard is considered to be more dovish than the already dovish Chair Powell, should Brainard be confirmed as the next Fed Chair, the initial reaction is likely to be one of USD selling, alongside US treasuries and Gold pushing higher, particularly given that bookmakers remain heavily in favour of Powell being renominated (Figure 1).

Figure 1. Powell Remains Heavy Favourite For Renomination as Fed Chair

Gold Price Forecast: Gold Bulls Face Significant Hurdle, Brainard Bullish for Gold

Source: PredictIt

Gold Bulls Face Significant Hurdle

As I mentioned above, gold is back at familiar resistance at 1833, which marks the 61.8% Fibonacci retracement of the 1450-2071 range. The level also coincides with the trendline stemming from all-time high, increasing the significance of the area, which has rejected gold topside on several occasions from July. Therefore, a close above would be a significant development for bulls and open the doors to 1860-75.

Gold Price Chart: Daily Time Frame

Gold Price Forecast: Gold Bulls Face Significant Hurdle, Brainard Bullish for Gold

Source: Refinitiv

IG Client Sentiment: Positioning Changes Could See Gold Reverse Higher

data shows 64.25% of traders are net-long with the ratio of traders long to short at 1.80 to 1. Our data shows traders are now at their least net-long Gold since Aug 19 when Gold traded near 1,780.78. The number of traders net-long is 2.38% higher than yesterday and 8.95% lower from last week, while the number of traders net-short is 8.69% higher than yesterday and 17.84% 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.