During the Asian session on Wednesday, gold experienced a downward technical correction, after updating 2012 maximums. There are no fundamental prerequisites for reducing the price of gold. On the contrary, all factors indicate further development of a long-term bull trend. A local decline in quotes is caused by a partial fixation of long speculative positions after updating a multi-year high of trades.
The global economy's future prospects remain dreadful. According to the IMF, the world economy has already entered the stage of recession. In 2020, the decline in global GDP may exceed 3%. According to the IMF chief economist, the decline will be more severe than during the 2008 financial crisis. To maintain national economies, central banks continue to increase liquidity in the market, which creates ideal conditions for the development of the bull trend for gold and updating the historical maximums price in the long term.
The start of the US corporate reporting season confirms that companies will suffer serious financial losses. JPMorgan Chase and Wells Fargo have shown a sharp decline in profit for the 1st quarter and have reserved billions of dollars to cover potential credit losses. Obviously, the economic situation in the United States and around the world will only worsen in the near future.
Today, the March report on US retail sales and industrial production data for the same period will be in the spotlight of the economic calendar.
Regarding the chart, the long-term bull trend remains relevant. Locally, we see the development of a retreat from the level of 1745.00. You can expect the resumption of upward movement from the level of 1710.00. If this mark is breached, the next target for correction will be the level of 1688.00.
Resistance Levels: 1725.00, 1745.00, 1760.00;
Support Levels: 1710.00, 1688.00, 1645.00.
The main scenario - further upward movement from the level of 1710.00.
An alternative scenario - a breakdown of support at the level of 1710.00 and a decline towards 1688.00.
The fundamental outlook is positive. Longs remain a priority. Entry points should be sought at the levels of 1710.00 and 1688.00.
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