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Gold is constrained in a narrow range

May 6 2020, 01:38 PM (+06) | Fortfs.com

Gold is constrained in a fairly narrow range due to the uncertainties in trade relations between the US and China and the prospects for the development of the global economy.

 

After a brief pause, Washington demanded that China respond to allegations regarding COVID-19 being artificially developed in a laboratory within Wuhan. The Trump administration is also increasing pressure on European partners to become more involved in an international investigation regarding China. Investors understand that a new round of conflict between the world's largest economies will significantly slow down the process of global economic recovery.

 

According to FRS officials, the US economy will only recover from the shock received in the second half of the year. Moreover, growth is likely to be slow and uneven, as the country is now struggling with the worst depression in decades.

 

The economic calendar today will focus on ADP data regarding changes in the number of employed in the non-agricultural sector. This report will shape investors' expectations before the publication of official data regarding the labor market on Friday.

 

A flat is locally forming on the chart, the borders of which can be indicated by levels 1695.00-1722.00. Within this price channel, we can expect a moderate increase in quotations towards the level of 1722.00.

 

Resistance Levels: 1722.00, 1740.00, 1750.00;

 

Support Levels: 1695.00, 1670.00, 1645.00.

 

The main scenario - growth towards 1722.00.

 

An alternative scenario - a breakdown of support at the level of 1695.00 and a decline towards 1670.00.

 

The current fundamental outlook is neutral. We consider longs near the level of 1695.00.

 

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