OUTLOOK: Price Signal Summary - Gold Remains Above Its Recent Lows

Gold non-commercial net long contracts rose by 10.2k to 174.2k in the week to May 27, with first Comex Gold future consolidating its recovery from the May 15 lows during this period. Net longs are now broadly in line with the long-term term average, indicating a much less-stretched positioning backdrop than in Q1 2025. This is supportive of those looking to re-engage in gold longs, which may still be attractive given the macro/geopolitical outlook and bullish technical conditions.

• In the week to May 27, short covering appeared dominant, with non-commercial shorts falling 14.2k to 59.9k. Total longs fell 4.0k to 234.1k.
• Intraday, spot prices are off session highs but remain up 1.80% at $3,348/oz. Familiar drivers are at play:
  • (i) Heightened policy uncertainty and trade tensions (which is also dragging the USD lower), following US President Trump’s latest threat of 50% tariffs on steel/aluminium imports from June 4 and ongoing hostility between the US and China.
  • (ii) Geopolitical unease following Ukrainian drone strikes on Russia this weekend.
  • (iii) Risks of structurally higher global inflation in the medium-term, a function of less open trade/global supply chains.
• A bullish theme in spot gold remains intact and recent gains signal the end of the corrective phase between Apr 22 - May 15. Medium-term trend signals are bullish too - moving average studies are in a bull-mode position, highlighting a dominant uptrend. Next resistance levels to watch:
  • RES 1: $3365.9 - High May 23       
  • RES 2: $3435.6/3500.1 - High May 7 / High Apr 22 and bull trigger

• In FX, a bullish theme in EURUSD remains intact and today’s gains reinforce current conditions. Support to watch lies at 1.1172, the 50-day EMA. A clear break of this average would undermine the bull theme and signal scope for a deeper retracement. This would open 1.1065, the May 12 low. On the upside, the breach of 1.1419, the May 26 high, confirms a resumption of the trend and opens 1.1573, the Apr 21 high and bull trigger.
• The trend condition in GBPUSD remains bullish and the latest shallow retracement is considered corrective. First key support lies at 1.3394, the 20-day EMA. A clear break of this average would suggest potential for a deeper correction and expose the 50-day EMA, at 1.3232. For bulls, a resumption of gains would refocus attention on 1.3593, the May 26 high and bull trigger. Clearance of this level would resume the uptrend.
• A bear cycle in USDJPY remains in play and the pullback from last Thursday’s high suggests the latest corrective bounce is over. Looking at price patterns, the May 29 session is a shooting star candle - a bearish signal. Key short-term resistance has been defined at 146.28, the May 29 high. A continuation lower would expose 142.12, the May 27 low. Clearance of this level would resume the bear leg.

The latest weekly CFTC CoT report points to an aggressive unwind of positions on the part of both asset managers and leveraged funds, although this may be skewed by roll activity.

• The report suggested that asset managers trimmed their net longs by ~$47mln DV01 equivalent, although the cohort remains net long across the curve.
• The report suggested that leveraged funds trimmed their net shorts by ~$30mln DV01 equivalent, although the cohort remains net short across the curve.
• Non-commercial net positioning (detailed in the table below) pointed to net shorts bring trimmed in most contracts. The exception was the addition to net shorts in FV futures. Note that the cohort remains net short across the curve.

Source: MNI - Market News/CFTC/Bloomberg