Speculators’ net positions in the gold market have refrained from rising since the summer months.
The fact that the stochastic indicator based on the gold price – chart 1, second panel, orange line – has started to decline after being high for a long enough period, while the relative momentum index based on the number of net long positions – chart 1, third panel, blue line – has been declining suggests that the power of speculators who demand gold may be waning.
The fact that the volatility indicator – chart 1, bottom panel, red line – which is also based on the number of net long positions, may rise from the levels it has declined, confirms the predictions of the technical indicators mentioned above.
Even more important indicators produce signals that the price may decline. In the second panel of Chart 2, it is observed that the 1-year carry yield, represented by the orange line, has declined from 7% to 2%.
Considering that this indicator leads speculators’ net long positions, speculators may make some selling adjustments in the coming weeks.
Conclusion: Unless an overnight close of $ 2720 and above during the week, short-selling attempts can be made to take advantage of short-term pullbacks in the rises.