Gold is constrained in the red zone on Friday amid recovery in global indices. At the same time, gold retains a good opportunity to resume upward movement amid growing fears related to the spread of coronavirus.
Yesterday, the main growth driver was the weekly report on the number of applications for unemployment benefits in the United States. The indicator grew by 3.28 million, exceeding the previous historical maximum by more than 5 times. Investors fear a worsening situation in the largest economy in the world, despite the White House and the FRS efforts to stabilize the situation. Today, White House economic adviser Larry Kudlov said the overall stimulus package could reach 6 trillion USD in the long run.
Risks associated with the deteriorating situation in the global economy and the dynamics of the USD movement create a favorable environment for strengthening gold.
Today, the economic calendar does not contain important macroeconomic reports, so the main influence on gold will be exerted by the situation on stock exchanges and the USD dynamics.
Regarding the chart, the bulls can not yet overcome the level of 1635.00. Another attempt at breakdown was unsuccessful. Therefore, today we are expecting the formation of a retreat in the direction of the level of 1590.00.
Resistance Levels: 1635.00, 1680.00, 1700.00;
Support Levels: 1590.00, 1545.00, 1515.00.
The main scenario - a decline towards the level of 1590.00 and further upward movement.
An alternative scenario - a breakdown of resistance at the level of 1635.00 and an increase towards 1680.00.
The fundamental outlook is moderately positive. Bearish signals are locally prevailing on the chart, so within the daily framework we are considering shorts from the level of 1635.00.
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