Gold on Thursday is constrained in a very narrow range, staying close to yesterday's highs.
A significant rise in the cost of gold the day before was provoked by a sharp weakening of the dollar. Thus, investors reacted to the messages of Bloomberg, which released insider information on the forecasts of the ECB. According to Bloomberg, the regulator will note an increase in positive sentiment regarding the prospects for the development of the EU economy.
The results of the ECB meeting will be announced later today. Despite Bloomberg reports, the market remains highly uncertain about the results of the ECB meeting, so investors are rather passive.
The focus of the market remains on the news about the course of negotiations between the UK and the EU on Brexit. The media disseminated information that an emergency meeting of high-ranking representatives from both sides is to be held today. European leaders want more information on the UK's future Brexit plans. The EU is concerned about reports of UK plans to pass a bill that would violate the previously agreed protocol on Northern Ireland.
Due to the general uncertainty in the market, the demand for gold and other defensive assets remains high. The dynamics of trading in the afternoon will be determined by the news from the US and the EU, which are expected today.
In the EU, the focus will be on the outcome of the ECB meeting and Brexit news. In the US, it is worth paying attention to the publication of data on the producer price index and the weekly report on the labor market.
On the chart, trading is still constrained in the flat channel of 1914.00-1947.00. While the bulls are trying unsuccessfully to break the flat up. As a priority, we consider the scenario with the continuation of consolidation in the above price channel.
· Resistance levels: 1947.00, 1967.00, 1993.00.
· Support levels: 1914.00, 1900.00, 1875.00.
The main scenario - a consolidation in the range of 1914.00-1947.00.
An alternative scenario - a breakdown of resistance at 1947.00 and growth to 1967.00.
The current fundamental outlook is neutral. We consider shorts from 1950.00.