On Wednesday, gold is slightly increasing after a fairly strong decline. The main support for gold is the news related to the spread of coronavirus. According to the latest data, the number of infected is around 25 thousand with 493 lethal cases.
Gold is pressured by the situation on stock exchanges. Today, major indices show a moderate corrective decline. While on Tuesday, the main indexes finished trading in the green zone. Risk appetite has returned to investors as they are confident that the global economy will be able to maintain growth despite the outbreak of coronavirus in China. A positive signal for the market was the actions of the People’s Bank of China aimed at stabilizing the country's financial system.
Therefore, despite local growth, the potential for the development of upward movement in gold and other protective assets remains limited.
Today, investors will follow the publication of non-farm employment data from the ADP and the U.S. Procurement Managers Index from the ISM.
Regarding the chart, the price tested a fairly strong support level of 1550.00. Now a retreat movement is developing from this level, the goal for which is the level of 1569.50.
Resistance Levels: 1569.50, 1585.00, 1600.00;
Support Levels: 1550.00, 1542.00, 1530.00.
The main scenario - an increase towards 1569.50 and further downward movement.
An alternative scenario - a breakdown of resistance at the level of 1569.50 and an increase towards 1585.00.
The fundamental outlook is neutral. A pullback movement is developing on the chart, therefore, shorts should be considered at the level no lower than 1569.50.