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Gold is approaching $ 1700

The stock indices decrease triggered a new rise for gold prices. Investors have reacted negatively to new reports of faster coronavirus spread in Europe, the UK and North America. Economists predict a decline in the financial performance of large corporations, a fall in consumer activity and a slowdown in global economic growth.

 

Amid falling stocks, investors prefer more reliable assets, including US government bonds. At the same time, over the past few days, the yield on 10-year securities decreased from 0.994% to 0.840%. In turn, gold has risen in price by more than 6.8% only in the past week, having demonstrated a record weekly yield since 2016. Obviously, against this background, precious metals are more attractive assets than other protective instruments.

 

Today, all investors' attention will be focused on the February US labor market report. On Thursday, the Ministry of Labor reported that the number of applications for unemployment benefits last week decreased. This suggests that the situation with the spread of coronavirus has not yet affected the labor market and the February report may be slightly better or at the level of forecast values. Locally, this data may support USD and halt further gold growth.

 

Regarding the chart, the price was able to overcome local resistance levels and is now testing the level of 1680.00. There are no reversal signals on the chart yet, therefore, as a priority, we consider a scenario with a breakdown level of 1680.00 and an increase in quotations towards 1700.00.

 

Resistance Levels: 1680.00, 1700.00, 1720.00;

 

Support Levels: 1666.00, 1635.00, 1605.00.

 

The main scenario - a breakdown of resistance at 1680.00 and an increase towards 1700.00.

 

Alternative scenario - correction towards 1655.00

 

The fundamental outlook is moderately positive. We consider longs from the levels of 1655.00 and 1635.00

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