Gold is still close to the historic highs due to a weak dollar, the spread of the pandemic and the prospect of keeping interest rates low by the FRS and other central banks for a long period of time.
The US Federal Reserve intends to keep interest rates low at least until the end of the coronavirus pandemic. At the same time, FRS Chairman Jerome Powell did not rule out new measures to stimulate the economy, if necessary. In response to these statements, the real yield on 10-year Treasuries, adjusted for inflation, fell to a new all-time low of -0.95%. It is obvious that in this situation the investment attractiveness of gold will only increase. A weak dollar makes gold more accessible to investors around the world.
Gold receives additional support due to the lack of progress in the United States negotiations on the formation of a new package of economic stimulus measures. Lawmakers only have two days left to make a decision as the current aid program expires on July 31.
Pandemic related news also provides additional demand for gold and other defensive assets. In the United States, the epidemiological situation remains difficult. In recent days, there has been an increase in diseases in China, South Korea, Japan, Australia and other countries.
Today in the economic calendar it is worth paying attention to the publication of the data of the primary estimate of the US GDP for the 2nd quarter and the weekly report on the labor market.
The price retested a new all-time high at 1981.00 yesterday. It was not possible to overcome this mark. Now a pullback movement is developing on the chart. If the bears manage to push the price below 1945.00, the target for the correction will be 1921.00.
Resistance levels: 1981.00, 2000.00;
Support levels: 1945.00, 1921.00, 1900.00.
The main scenario - a breakdown of support at 1945.00 and a decline to 1921.00.
An alternative scenario - a consolidation in the range of 1945.00-1981.00.
The current fundamental outlook is positive. We would consider longs in the area of the 1921.00 level.