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Gold bears await Federal Reserve decision, United States Non-farm Payrolls
Gold price holds lower ground near $1,925 after posting an indecisive weekly closing as the metal traders await the key United States data and the Federal Reserve’s (Fed) monetary policy decision. Also important will be central bank meetings of the European Central Bank (ECB), Purchasing Managers’ Indexes data and the US employment numbers for January.
Central bank fest as dollar continues its decline
The focus this week is the Federal Reserve meeting, the Bank of England rate decision and Monetary Policy Report and the ECB meeting. This troika of central bank decisions could set the tone for the rest of the year: the Federal Reserve passing the baton of global leader when it comes to tightening monetary policy.
The United States Commodity Futures Trading Commission (CFTC) recently released data showing a decrease in net positions for the S&P 500 Noncommercial Net Positions, from $226.8k to $209k.
This decrease signals a shift in the sentiment among traders of this particular financial index. The S&P500 index is a reflection of the overall American economy, so changes in net positions are taken as a sign of how investors perceive the future of the economy.
Since the decrease noted in this particular index is quite minimal, it is to be expected that the overall market sentiment is still bullish. The decrease does not represent a decrease in market confidence, but only a minor correction in a typically bullish market.
It is also important to note that this change only reflects net positions, not the value of each individual traders’ overall positions. The net position is the sum of all open positions held by participants, not a reflection of each individual trader’s gain or loss.
In conclusion, the decrease in S&P 500 Noncommercial Net Positions does not reflect a decrease in market confidence, but simply a minor correction in an overall bull market. This minor adjustment does not appear to have any significant impact on the short to medium-term outlook.