On Friday at the Asian trading session, the price of gold decreased by 0.5% despite the ongoing decline in world stocks. Experts note that the decline in gold is present despite the background of fixing speculative positions after updating 7-year trading highs. This pause is likely to be temporary, and in relation to the news of coronavirus spread outside of China, gold will resume its upward movement.
Today, the World Health Organization stated that an outbreak of coronavirus could become a pandemic and is now actively spreading outside of China, where the virus was first detected.
Another driver for gold growth may be rumors that FRS may reduce interest rates by 0.25 b.p. at the next meeting. According to CME Group, investors estimate the probability of a rate cut at 72%, against 9% a week earlier.
After testing the resistance at the level of 1660.00, the price resumed its downward movement. Now we see increased pressure at the level of 1630.00, therefore, currently we are expecting the reduction of quotations towards the level of 1616.00.
Resistance Levels: 1660.00, 1680.00, 1700.00;
Support Levels: 1630.00, 1616.00, 1600.00.
The main scenario - a breakdown of support at the level of 1630.00 and a decline towards 1616.00.
An alternative scenario - a consolidation in the channel of 1630.00-1660.00.
The fundamental outlook is moderately positive. Despite the fundamental background, bearish signals prevail on the chart. We consider shorts from the level of 1645.00.