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Gold prices may continue to recoup the losses from earlier this week as the precious metal snaps the recent series of lower highs & lows.

The recent price action boosts the near-term outlook for gold as the precious metal regains its footing ahead of the monthly-low ($1261), and bullion may continue to trade on a firmer footing as it appears to be carving an outside-day (engulfing). Keep in mind, fresh comments from Fed Chair Janet Yellen may tame gold prices as Fed Fund Futures highlight a greater than 80% probability for a December rate-hike, and the precious metal stands at risk of facing range-bound conditions should the central bank head show a greater willingness to further normalize monetary policy in 2018.

However, the broader shift in market behavior may continue to unfold over the coming months as Fed officials lower their longer-run forecast for the benchmark interest rate, and the Federal Open Market Committee (FOMC) may stick to the sidelines during the first-half of 2018 especially as Chair Yellen’s tenure is set to expire in February.

XAU/USD Daily Chart

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• The outlook for gold remains constructive as it continues to hold above the $1260 (23.6% expansion) region, but the topside targets will come back on the radar once XAU/USD climbs back above the Fibonacci overlap around $1297 (23.6% retracement) to $1302 (50% retracement) and clears the monthly opening range.
• First region of interest comes in around $1312 (61.8% expansion) to $1315 (23.6% retracement) followed by the $1328 (50% expansion) region.

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NZD/USD tumbles to a fresh monthly-low (0.7015) as the new coalition government under Prime MinisterJacinda Ardern pledges to review and revise the Reserve Bank of New Zealand’s (RBNZ) primary mandate for price stability.

The change in leadership may continue to produce headwinds for the New Zealand dollar as lawmakers now want the RBNZ to also be accountable for full-employment, and it seems as though acting Governor Grant Spencer will have little choice but to retain the record-low cash rate at the next meeting on November 9 amid the growing scrutiny surrounding monetary policy. With that said, NZD/USD may continue to chip away at the advance from the 2017-low (0.6818) as price and the Relative Strength Index (RSI) preserve the bearish formations carried over from the summer months.

NZD/USD Daily Chart

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Chart - Created Using Trading View

• With the near-term outlook capped by the Fibonacci overlap around 0.7190 (50% retracement) to 0.7200 (38.2% retracement), downside targets are back on the radar for NZD/USD especially as the initiates a fresh series of lower highs & lows.
• Next hurdle comes in around 0.6990 (23.6% retracement) followed the former-resistance zone around 0.6950 (38.2% retracement); keep a close eye on the Relative Strength Index (RSI as it approaches oversold territory, with a break below 30 raising the risk for a further decline in the exchange rate as the bearish momentum gathers pace.

Retail Sentiment

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• Retail trader data shows 78.9% of traders are net-long Spot Gold with the ratio of traders long to short at 3.73 to 1. The number of traders net-long is 7.8% higher than yesterday and 5.2% lower from last week, while the number of traders net-short is 6.4% lower than yesterday and 12.0% higher from last week.
• Retail trader data shows 61.3% of traders are net-long NZD/USD with the ratio of traders long to short at 1.59 to 1. The number of traders net-long is 32.2% higher than yesterday and 9.6% higher from last week, while the number of traders net-short is 17.0% lower than yesterday and 18.8% higher from last week.

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