Gold price maintains an upward movement vector amid growing fears regarding the global economy prospects. Major stock indexes today moved into the red trading zone, after reports of unsuccessful trials of a new anti-coronovirus drug. Gilead Sciences discontinued vaccine testing ahead of schedule due to inefficiency. Many investors hoped that the drug against Covid-19 would be quickly developed and the spread of the disease could be stopped. Restrictive measures would be lifted and the dynamics of the global economy would be V-shaped (a sharp slowdown and a quick rebound up).
Gold is also supported by active incentive measures taken by states and Central Banks. Recently, the US House of Representatives approved a new package of incentive measures with a net worth of nearly $500 billion. Data on the labor market indicates that the unemployment rate in the country can reach 20%, which will entail the adoption of new incentive measures by the FRS and the White House.
The restraining factor for gold remains unchanged - USD dynamics. The American currency remains a defensive asset and its appreciation somewhat limits the demand for precious metals. But in the long run, gold retains good chances for further growth.
On the chart yesterday, a breakdown of resistance took place at the level of 1715.00. The price continued to move up and reached the next resistance level at 1740.00. Within the daily framework, we advise to pay attention to the support level of 1720.00. As long as the price is held above that mark, the priority is growth of quotations towards 1740.00 and above.
Resistance Levels: 1740.00, 1755.00, 1770.00;
Support Levels: 1720.00, 1695.00, 1675.00.
The main scenario - growth towards 1740.00 and above
An alternative scenario - a breakdown of support at the level of 1720.00 and a decline towards 1695.00.
The current fundamental outlook is moderately positive. We consider longs from the levels of 1720.00 and 1695.00.
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