Gold Price Forecast: Topside Targets on Radar Following Breakout

Gold Talking Points

Higher gold prices appear to be on the horizon as the precious metal breaks out of a near-term range, and the recent pickup in volatility keeps the topside targets on the radar as bullion carves a series of higher lows.

Image of daily change for financial markets

Gold Price Forecast: Topside Targets on Radar Following Breakout

Image of daily change for gold prices

Gold threatens the downward trend from earlier this year even as the recent rout in risk appetite dissipates, and recent developments appear to be isolated to bullion as silver prices continue to track the monthly opening range for October.

In addition, safe-haven currencies like the Swiss franc have also shown a limited response to the recent developments surrounding the global economy even though the International Monetary Fund (IMF) reduced its world growth forecast for the first time since 2016, and gold may continue to catch a bid over the near-term as it appears to be moving to the beat of its own drum.

Image of IG client sentiment for gold

Keep in mind, the IG Client Sentiment Report still shows retail interest at extremes as 81.8% of traders are net-long with the ratio of traders long to short at 4.49 to 1.The number of traders net-long is 8.7% lower than yesterday and 3.6% lower from last week, while the number of traders net-short is 25.7% higher than yesterday and 14.6% higher from last week.

The ongoing tilt in retail position undermines the recent strength in gold as it offers a contrarian view to crowd sentiment, but the recent breakout in gold prices keeps the topside targets on the radar especially as the precious metal threatens the downward trend from earlier this year. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups.

Gold Daily Chart

Image of gold daily chart

  • Broader outlook for gold is no longer bearish as it clears trendline resistance, with the break above the $1210 (50% retracement) to $1219 (61.8% retracement) hurdle raising the risk for a move towards the Fibonacci overlap around $1249 (50% retracement) to $1250 (38.2% retracement).
  • Next topside region of interest comes in around $1260 (23.6% retracement) followed by the $1279 (38.2% retracement) area.

For more in-depth analysis, check out the Q4 Forecast for Gold

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— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.