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The highly anticipated news week has finally come to an end with many markets claiming the headlines including Gold (XAUUSD). In this week’s forex trading week ahead we will discuss if Gold longs still make sense at these highs, a big clue lies in the commitment of trader reports (CoT).
Before we get into that we have some important data coming up this week including two key central bank decisions. The first the RBA is forecast to leave interest rates unchanged at 4.35%. Strong employment figures and a higher inflation rate will give the RBA little room to provide a dovish outlook.
On the other hand the Swiss National Bank is forecast to cut interest rates again by a quarter of one percent for a third meeting in a row. They cut previously due to the strength in the Swiss Franc and the decrease in inflationary pressures. This time around the Swiss Franc is starting to give back some of that strength, but inflation has continued to fall in line with expectations.
In the FOMC interest rate decision last week, Chairman Powell contributed a portion of his speech to the Core PCE Price Index falling over the year as a reason for cutting rates along with the unemployment rate. This indicator is the preferred measure of inflation for the Fed and it showed two months of growth at 0.2%. Forecasts suggest we could see the same again.
Gold prices have made new all time high this week peaking at $2625.79. The commitment of trader reports this week provide some interesting information. Large hedge funds and traders are buying Gold at extreme levels, surpassing those of March 2022. Price that time fell from around $2000.00 to $1600.00.
DXY (USD Index)
- The USD closed lower again last week, but remains in the weekly demand zone.
- If the price can trade through the weekly highs and back above $101.00, buyers might jump in.
- However, if USD sentiment refuses to change we could expect a move down towards $100.00.
USD/JPY
- The weekly chart shows the price closing bullish after rejecting support at 140.00.
- CoT reports showed significant selling from the commercials however, this seems to have changed dramatically from last week. Some further weakness could continue.
USD/CHF
- The price of USD/CHF remains above the key demand zone of 0.8500.
- CoT reports are showing a significant short position from the commercials which could lead to a short term rally here.
GOLD (XAU/USD)
- The price of Gold made new highs last week breaking all previous records.
- CoT reports highlight hedge funds and traders are holding significant longs at levels we haven’t seen since March 2022. This could be a sign of a top.
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