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Gold remains under pressure by a strong dollar.

May 20 2019, 05:50 PM (BDT) | Fortfs.com

On Friday, the price of gold continued to move in the framework of a downward trend, amid strengthening of the US currency. The dollar index is now trading near two-year highs, while maintaining a good opportunity to continue the bullish trend. Since gold is nominated in US currency, its further growth makes the precious metal more expensive for foreign investors, which reduces the demand for this asset.

The drivers for the strengthening of the dollar are the US statistics. According to the data presented on Friday, the consumer sentiment index in the country rose to its highest level in the last 15 years, indicating that Americans maintain high confidence regarding the prospects for the development of the national economy.

The main factor supporting gold is still high geopolitical risk associated with the development of the situation in world trade, as well as rising tensions in the Middle East. But, currently many investors give their preference to other protective assets, which reduces the ability to recover the value of the precious metal. Therefore, the main guideline for investors now is the American dollar, on which the further vector of gold movement depends.

Today, geopolitics news will be in the focus of investors' attention, as well as numerous speeches by representatives of the FOMC and Fed Chairman Jerome Powell (23:00 GMT).

On the chart there was a breakdown of a very important support level of 1279.50. This is, first of all, a strong signal of the continuation of the bearish trend, therefore, within the day the shorts remain relevant. The main target for the movement now is the level of 1270.00.

Resistance Levels: 1279.50, 1289.00, 1300.00;

Support levels: 1270.00, 1265.00, 1260.00.

The main scenario is a decline towards the level of 1270.00.

An alternative scenario - consolidation above 1279.50 and growth to 1289.00.

Gold remains under pressure from important fundamental factors, which contributes to the development of a bearish trend on the price chart. Therefore, in the short term, we still prefer sales that should be sought from the nearest strong resistance levels at 1279.50 and 1289.00.


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