Gold set a new all-time maximum at $ 1981 amid a weakening dollar and high geopolitical risks. After reaching this level, investors began to fix long positions in gold, as a result of which the quotes fell by $ 40 within an hour. Despite a significant drop, gold remains in the green zone (+ 0.25%).
News from the US remains the key driver of growth in quotations. Investors are confident that this week the FRS will reaffirm its commitment to loose monetary policy and possibly signal inflation targeting. This policy will contribute to a further depreciation of the USD and a fall in the yield of 10-year Treasuries. Last week, the real (inflation-adjusted) yield on 10-year bonds fell to a record low of -0.90%. With the current level of profitability, government bonds cannot compete with gold in terms of investment attractiveness.
In the second half of the Asian trading session, USD trading weakened and USD managed to restore a small part of its previously lost positions, putting moderate pressure on gold. Since the beginning of the day, the dollar index has strengthened by a modest 0.17%.
Investors continue to follow the debate between Republicans and Democrats over the size and structure of the new stimulus program. The decision must be made by Friday.
Today, the key influence on gold will be provided by investor sentiment on stock exchanges and further dynamics of the dollar index. In the economic calendar, it is worth paying attention to the publication of the consumer confidence index of the SV for July.
Regarding the chart, we note a very sharp reversal at the 1981.00 level, which may become a signal for the start of a strong corrective movement. But as long as buyers keep the price above the key support levels, the bullish scenario remains the priority in the medium term. Within the day, we are expecting a decline in quotations to the 1921.00 area, after which the upward movement can be resumed.
Resistance levels: 1946.00, 1980.00, 2000.00;
Support levels: 1931.00, 1921.00, 1900.00.
The main scenario - a decline to 1921.00 and an increase to 1946.00.
Alternative scenario - a breakdown of intraday resistance at 1946.00 and rise to 1980.00.
The current fundamental outlook is positive. We would consider longs in the range between the levels of 1921.00-1931.00.