On Thursday during the Asian trading session, gold fell by more than 1% due to the strengthening of USD.
USD rose sharply after the announcement of the results of the FOMC meeting, despite the fact that the regulator signaled a prolonged period of low interest rates. Jerome Powell stated that interest rates will remain close to zero until inflation rises above 2%. 17 Fed officials expect interest rates to remain low until the end of next year. 13 of them do not rule out maintaining the current level of rates until the end of 2023.
In our opinion, despite the local decline, gold retains very good opportunities to resume its upward movement. The Fed's soft policy will put very strong long-term pressure on the US currency and the US Treasury yield curve. The yield curve for 10-year securities has already moved into the red trading zone (-1.18%), after rising the day before.
The prospects for the development of the world economy remain uncertain. The upcoming US presidential elections, the US-China trade conflict, Brexit and other important events only exacerbate this uncertainty. In these conditions, gold remains one of the most reliable assets for reducing the risks of losses in the market.
Today in the economic calendar it is worth paying attention to the publication of data on issued permits for construction in the United States and a weekly report on the labor market.
The price remains in the flat channel of 1940.00-1967.00, but the bears are gradually increasing pressure on the lower boundary of the flat trend. There is still a high probability of a breakdown and the development of a downward movement towards 1914.00. A false breakout of the level of 1940.00 may become a strong upward reversal signal.
· Resistance levels: 1967.00, 1993.00, 2030.00.
· Support levels: 1940.00, 1914.00, 1900.00.
The main scenario - a consolidation below 1940.00 and a decline to 1914.00.
An alternative scenario - a false breakdown of the 1940.00 level and an increase to 1967.00.
The current fundamental outlook is moderately positive. We consider longs from the level of 1914.00.