Gold Price Prediction – Prices Rise to Hit 8-year Highs Despite Hedge Funds Reducing Long Positions

Gold prices moved higher and closed at a new 8-year high. The dollar closed lower on Monday after declining by 0.75% during the prior week. With congress only having a small window to push out a new stimulus package, the dollar continues to remain under pressure. The EU summit over the weekend generated a deal, which helped buoy the EUR/USD paving the way for higher gold prices. US yields were mixed, but the curve continued to flatten.

Trade gold with FXTM

Gold prices finished at 8-year highs and continue to trend higher. Support is seen near the 10-day moving average near 1,805. A break of this level could lead to a test of support near the 50-day moving average near 1750. Resistance is seen near the July highs at 1,815. Medium-term momentum has turned negative to neutral. The MACD (moving average convergence divergence) histogram prints near the zero-index level with a flat trajectory that points to consolidation. Short-term momentum is also flat as the fast stochastic is printing a reading of 82, which is just above the overbought trigger level of 80, which could foreshadow a correction.

Hedge Funds Reduce Long Positions

Hedge funds reduced long positions in futures and options according to the latest commitment of trader’s report released for the date ending July 14. According to the CFTC, managed money reduced long position in futures and options by 2.2K contracts while increasing short positions in futures and options by 1.9K contracts. Total open interests show that hedge funds are long 218K contracts compared to short 40K contracts.