On Wednesday morning gold is traded in the green zone, recovering from a strong decline in quotes the day before. The precious metal is supported by the situation on stock exchanges, where major indices have moved back to the red zone.
On Tuesday, the price was pressured by speculation on the news that Russia decided to suspend purchases of gold bars from April 1, turning from a major buyer to a seller of physical gold. Experts are afraid that other countries may follow the example of Russia. With the growing economic crisis, countries are selling gold reserves in exchange for cash to cover the growing costs of maintaining the economy. This situation may again undermine the position of gold as the main protective asset.
Today's economic calendar will focus on PMI data for manufacturing sectors in the US and key European countries, as well as ADP labor market statistics. After the growth in February by 183 thousand, in March experts expect the number of workers in the U.S. non-agricultural sector to decline by 150 thousand. If the forecasts are confirmed, the U.S. dollar may again be under pressure, contributing to the recovery of precious metal value.
Bearish signals prevail locally on the chart. The bears managed to break the support at 1590.00 yesterday. Now this level acts as a resistance to the price. While trading below this level, the scenario with the development of descending movement remains as a most likely one.
Resistance levels: 1590.00, 1615.00, 1635.00;
Support levels: 1575.00, 1545.00, 1515.00.
The main scenario is a decrease in the direction of 1545.00.
Alternative scenario is a break-down of the resistance at 1590.00 and a rise towards 1615.00.
Fundamental background - moderately negative. Negative signals prevail in the chart. While the price remains below the level of 1590.00, we give priority to selling the instrument.