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Gold declines amid recovery in stock indices

May 5 2020, 02:27 PM (BDT) | Fortfs.com

Gold prices are moderately declining on Tuesday due to a recovery in global stock indices.

 

The stock market was supported by news and quarantine measures in some countries, as well as a softening White House rhetoric regarding China.

 

Since Monday, many EU countries, as well as some US states, have begun to gradually ease quarantine measures. Investors hope for a gradual restoration of economic and social activity, which will have a positive impact on the situation in the global economy.

 

On Monday, Deputy National Security Advisor, Matthew Pottinger and Treasury Secretary, Stephen Mnuchin stated that the United States would not increase economic pressure on China if all the conditions for an interim trade agreement signed earlier this year were met. These statements somewhat eased investors' concerns about the worsening trade relations between the US and China, after Trump’s accusations that China had hidden the real facts of the spread of coronavirus inside the country.

 

Regarding the economic calendar today, it is worth paying attention to the PMI data of the US non-manufacturing sector published by ISM. Experts predict a drop from 52.25 to 36.8 points.

 

Regarding the chart, we note the unsuccessful attempt of the bulls to develop an upward wave towards the level of 1722.00. Bears are trying to return the price to the level of 1695.00, gradually increasing pressure on this level. A more relevant scenario today is further downward movement.

 

Resistance Levels: 1707.00, 1722.00, 1740.00;

 

Support Levels: 1695.00, 1670.00, 1645.00.

 

The main scenario - a breakdown of support at the level of 1695.00 and a decline towards 1670.00.

 

An alternative scenario - growth towards 1722.00.

 

The current fundamental outlook is moderately negative. We consider shorts from the level of 1707.00.

 

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