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Demand for defensive assets has increased, but the situation may change

As a result of yesterday's trading, gold prices rose by more than 0.8% against the background of the negative dynamics of the stock market and the decline in the dollar.

Yesterday, all the major stock indices were trading in the red zone, amid aggravation of the trade conflict between the US and China. In the morning, the Chinese authorities accused the United States of escalating this conflict and warned against "dangerous" actions against Huawei. Later, Donald Trump announced the launch of a support program for victims of the trade conflict and said that Huawei Technologies Co. can become a “bargaining chip” in trade negotiations between the two countries. The American president called this company very dangerous for the United States and did not rule out the inclusion of certain provisions on Huawei in the trade agreement. The aggravation of the conflict lowered investors' expectations regarding the speedy signing of a trade agreement between the two countries and investors began to quickly get rid of risky assets, preferring gold and the Japanese yen.

The American dollar during yesterday's trading also contributed to the strengthening of gold. The dollar fell after the publication of weaker data on sales of new housing and business activity in the services sector and production. After that, Goldman Sachs lowered the forecast for US GDP growth in the 2nd quarter from 1.6% to 1.5%.

Today, the market situation has changed somewhat. Stock indices, after a very strong decline the day before, went over to correction, helping to reduce the demand for safe assets. Locally, gold is supported by the dollar index, which is now trading at a decrease of 0.15%, but during the day we can expect a moderate recovery in the dollar, which will increase the pressure on the yellow metal.

Today, in addition to geopolitical news, you should pay attention to data on orders for durable goods in the United States.

On the chart, we note the breakdown of local resistance at 1279.50, which opens the way for further growth of quotations in the direction of 1289.00. This, in turn, is quite a strong intermediate resistance level, from which we can expect the development of a correctional wave to the area of ​​1279.50.

Resistance Levels: 1289.00, 1300.00, 1310.00;

Support levels: 1279.50, 1270.00, 1265.00.

The main scenario - growth to 1289.00 and downward correction.

The alternative scenario is a decline to 1279.50 from current levels.

The fundamental background has changed dramatically in the market, so today we are waiting for the price movement to turn down. Accordingly, within the day, we give preference to shorts of the instrument, which is advisable to look for at the level of 1289.00.

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