On Monday, gold prices are constrained in the red zone despite the heavy decline of Chinese stock indices.
The Shanghai Composite and Shenzhen Component declined by more than 8% after the country's National Health Commission confirmed that the death toll due to the new virus on Monday estimated to 361, and the number of confirmed cases increased to 17,205. The spread of the deadly virus has led to the second largest economy in the world virtually stopping. Earlier, we reported that Goldman Sachs revised its forecast for China's GDP growth in 2020 from 5.9% to 5.5%.
Due to the backdrop of increasing geopolitical and economic risks in January, the gold price increased by more than 2%, while maintaining high chances of further growth.
Today, in addition to news about the spread of coronavirus, investors will closely monitor the publication of PMI data on manufacturing sectors in the United States and key countries of the Eurozone.
Regarding the chart, buyers are unable to gain a foothold above the mark of 1585.00. Therefore, within the daily framework we are waiting for the development of a downward wave in the direction of the level of 1569.50.
Resistance Levels: 1585.00, 1600.00, 1611.00;
Support Levels: 1569.50, 1550.00, 1542.00.
The main scenario - a decline towards 1569.50.
An alternative scenario - a breakdown of resistance at the level of 1585.00 and an increase in the direction of 1600.00.
The fundamental outlook is moderately positive. Bearish signals are locally prevailing on the chart. Therefore, within the daily framework, we consider shorts from the levels of 1580.00 and 1589.00.
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