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Gold is constrained within a narrow range, despite the decline in stock indices and the weakening USD

Apr 22 2020, 02:44 PM (BDT) |

Gold is constrained in a fairly narrow price range, demonstrating slight deviations from the opening price. At the same time, the general fundamental background for gold remains positive. Turbulence in the oil market has significantly reduced investor interest in risky assets. A positive factor for gold is the USD dynamics. Since this morning, the dollar index dipped by 0.15%.


But the fundamental background is not yet reflected in the price chart. Some experts attribute this to a low level of physical demand for precious metals, due to the deterioration of the global economy. According to various estimates, industrial demand for gold constitutes approximately 70% of the total demand.


In the long-term, gold retains good opportunities for the development of the bull trend. Bank of America announced an increase in its 18-month gold target from $ 2,000 to $ 3,000. The forecast has been revised due to the worsening situation in the global economy and large-scale stimulus measures from the FRS and other Central Banks.


There is no important news in the economic calendar today, therefore the dynamics of the prices for precious metals will depend on the situation on the stock exchanges and the news of geopolitics.


Regarding the chart, bearish signals still prevail. Bulls cannot gain a foothold above the level of 1695.00. Today we are expecting further downward movement. The main goal remains the mark of 1645.00.


Resistance Levels: 1695.00, 1715.00, 1740.00;


Support Levels: 1675.00, 1645.00, 1610.00.


The main scenario - a decline towards the level of 1645.00.


An alternative scenario - a breakdown of resistance at the level of 1695.00 and an increase towards 1715.00.


The current fundamental outlook is moderately positive. Despite the positive fundamental background, bearish signals still dominate the chart. Therefore, within the daily framework, we give preference shorts with very moderate risks. Entry points are to be sought after at the levels of 1695.00 and 1715.00.

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