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Gold stands above $ 1,700 before Jerome Powell’s speech

Gold is still constrained in a fairly narrow range, remaining above the $ 1,700 mark. Investors took a wait and see attitude before the speech of the FRS head, Jerome Powell, which will take place today.

 

According to data released on Tuesday for the month, the base consumer price index in the US fell from 2.1% to 1.4%. This is the maximum decrease in the indicator over the entire history of observations. The market is trying to assess the likelihood of a further decline in inflation or the onset of deflation due to economic problems associated with the coronavirus pandemic. Investors are expecting Powell's comments on this subject. The data released on Tuesday could significantly affect the FRS future policy, as deflation could strengthen the recession in the US economy. Now speculation about the decision to establish negative interest rates in the United States is intensifying.

 

Demand for gold is supported by fears associated with the start of the second wave of the coronavirus pandemic. Now China and South Korea are actively struggling with the virus starting to spread again. On May 12, South Korea announced 26 new cases of COVID-19 infection.

 

Regarding the chart, trades are still constrained in the flat of 1695.00-1722.00. The price breaking the flat upward still remains the main scenario.

 

Resistance Levels: 1722.00, 1740.00, 1750.00;

 

Support Levels: 1695.00, 1670.00, 1645.00.

 

The main scenario - growth towards 1722.00.

 

An alternative scenario - a breakdown of support at the level of 1695.00 and a decline towards 1670.00.

 

The current fundamental outlook is moderately positive. Within the daily framework, we consider longs from the level of 1695.00.

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