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Gold Declines Before the Non-Farm Payrolls Publication

During the Thursday asian trading session gold declined due to positive circumstances on stock exchanges. Demand for traditional defensive assets is declining.

 

Investors' risk appetite is spurred by several factors at once. Firstly, investors are positive about macroeconomic statistics from the US, China and Europe, published earlier this week. The weakening of quarantine measures helps restore economic activity in key regions of the world. On the other hand, investors ignore reports of the emergence of new foci and further spread of the virus and the introduction of new quarantine measures in California and other states.

 

Secondly, the market reacted very positively to the news regarding the American company Pfizer and the German BioNTech successfully conducting initial tests of the vaccine for COVID-19. The vaccine is well tolerated in the early stages of human trials. On the same day, The Washington Post published an article in which the WHO Director-General announced that 141 vaccines against COVID-19 are currently being developed in the world. Some companies are a few months away from the end of the test.

 

Despite a local decline, gold retains good opportunities for the resumption of upward movement in the longer term. Yesterday, the FOMC protocols confirmed that the FRS plans to keep interest rates at levels close to zero until the end of 2022. Most likely, other Central Banks will adhere to the same policy. Soft monetary policy and low yield of government bonds make gold an attractive asset for investment.

 

Today, the central event of the day will be a report on the labor market for June. The data will be published on Thursday due to the Independence Day celebration in the US on Friday..

 

Regarding the chart, it is worth paying attention to the level of 1765.00. As long as the price is constrained above it the bulls will retain the opportunity to resume upward movement and test the mark of 1780.00. If the price consolidates below 1765.00, the next target will be the level of 1745.00.

 

Resistance levels: 1780.00, 1800.00, 1820.00;

 

Support Levels: 1765.00, 1756.00, 1745.00.

 

The main scenario - an increase to 1780.00 and further downward movement.

 

An alternative scenario - a decline towards 1745.00 from the current levels.

 

The current fundamental outlook is moderately negative. We would consider shorts from the level of 1780.00

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