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Gold price is boosted by the FRS head’s commentary

The price of gold continues to rise amid concerns about the second wave of the COVID-19 pandemic and the gloomy forecast of the FRS head.

 

Recently Jerome Powell broke investors' hopes for a quick recovery of the US economy. Obviously, the process will be slower and more difficult than previously expected. Jerome Powell called on the White House and Congress to allocate more money to combat the economic problems caused by the pandemic. "The scale and speed of this recession has no modern counterparts, and they are significantly worse than any recession after the Second World War," Powell said.

 

Despite the weakening of quarantine measures in many countries, investors still fear the onset of the second wave of the coronavirus pandemic. Concerns remain about new outbreaks of the virus in China and South Korea. China has again imposed restrictions on movement near its borders with North Korea and Russia, and South Korea is working to contain the outbreak of the virus in bars and nightclubs of Seoul.

 

The restraining factor for gold is still the American dollar. Despite the darker prospects for economic recovery, the US dollar strengthened its position after Powell stated that FRS was not considering setting negative interest rates.

 

Today, in the economic calendar, investors will follow the publication of weekly data on the US labor market.

 

The horizontal range of 1695.00-1722.00 remains relevant on the chart. Now the price is approaching the upper border of the side. The probability of a breakdown of this mark can be estimated as quite high. In this case, the next target will be the level of 1740.00.

 

Resistance Levels: 1722.00, 1740.00, 1750.00;

 

Support Levels: 1695.00, 1670.00, 1645.00.

 

The main scenario - a breakdown of resistance at the level  of 1722.00 and an increase in the direction of 1740.00.

 

An alternative scenario - a consolidation in the channel of 1695.00-1722.00.

 

The current fundamental outlook is moderately positive. We consider longs at the level of 1709.00.

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