Gold continues to grow on Friday morning amid a USD decline and concerns about the outlook for the global economy.
Since the beginning of the day, the dollar index has dipped more than 0.4%. The pressure on the US currency is still exerted by a number of important factors: the FRS soft monetary policy, an aggressive asset buyback program and a large stimulus package from the White House, fears associated with a slowdown in the economy amid the development of the second wave of the pandemic, a record decline in GDP in 2 m quarter, political uncertainty (Trump's statements about the possible postponement of the presidential election and the inability of legislators to agree on a new package of economic stimulus measures). All these factors provoke active sales of the American currency against the background of which the dollar may end July with the strongest decline in the last 10 years. Furthermore, the yield of American treasuries is also declining. These assets can no longer compete with gold.
Goldman Sachs analysts stated that in the future, the price of gold may jump to $ 2,300 per ounce. This scenario will be possible if the coronavirus continues to spread. At the same time, any hints of a possible solution to the COVID-19 problem could significantly weaken the bullish trend in gold and turn the price down.
In the first half of the day, the fundamental background for gold remains favorable, so the precious metal may continue to move up.
There are no signs of a trend reversal on the chart yet. The price is consolidating in the horizontal range of 1945.00-1981.00. The scenario with the exit from the flat upwards remains the priority.
Resistance levels: 1981.00, 2000.00;
Support levels: 1945.00, 1921.00, 1900.00.
The main scenario - a consolidation in the range of 1945.00-1981.00.
An alternative scenario - a breakdown of resistance at 1981.00 and growth to 2000.00.
The current fundamental outlook is positive. We would consider longs in the area of 1945.00.