After updating the 8-year maximums, the price of gold resumed its downward movement amid the strengthening of the USD. Current situation demonstrates the strong dependence of gold and other commodity assets on the dynamics of the USD.
Despite the risks associated with the outbreak of the second wave of the pandemic and gloomy IMF forecasts on the prospects for the development of the global economy, the price of gold declines. At the same time, the USD index according to yesterday's results strengthened by more than 0.6%. Today it has gained 0.15%.
Risk appetite in financial markets has declined due to reports of an increase in the number of cases of COVID-19 worldwide. More than half of all US states reported an increase in the number of new cases of coronavirus, with some of them updating record highs daily. New measures are being implemented to curb the spread of the virus. Investors fear that these restrictions will negatively affect the pace of economic recovery.
IMF experts predict a decrease in global GDP this year by 4.9%, against 3.0% in April. Experts note that the negative impact of the coronavirus pandemic on the global economy is increasing. The recession will be the largest since World War II.
In our opinion, despite a local decline, gold retains good potential for further growth in the direction of the level of $ 1800, since the USD now has limited opportunities for further growth.
US data on the assessment of GDP for the 1st quarter as well as a report on orders for durable goods and weekly data on the labor market will be the most important news in the economic calendar today..
A pullback movement is developing on the chart after testing the 1780.00 mark. Within the daily framework, it is important to pay attention to the level of 1767.00. If buyers can raise the price above this mark, we can again see quotes at the level of 1780.00. If the bears manage to defend the level of 1767.00, the next target will be the mark of 1745.00.
Resistance Levels: 1767.00, 1780.00, 1800.00;
Support Levels: 1760.00, 1745.00, 1723.00.
The main scenario - a consolidation above 1767.00 and growth towards 1780.00.
An alternative scenario - a decline towards 1745.00 from current levels.
The current fundamental outlook is moderately positive. We would consider longs from the level of 1762.00