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Gold is constrained in a narrow range

Gold is constrained in a narrow range on Friday, holding position near the highs of the previous trading day.

 

Gold gained support on Thursday after the publication of unexpectedly weak data on the US labor market. The number of initial applications for unemployment benefits unexpectedly increased by 1.106 million. The forecast was at 925 thousand. The data indicate an increase in the negative impact of the new wave of the pandemic on the labor market and the US economy as a whole.

 

Today, demand for gold remains limited. Demand for defensive assets is weakening amid reports of an imminent US registration of the COVID-19 vaccine and the resumption of trade talks between the US and China.

 

The American company Pfizer is preparing to submit a new COVID-19 vaccine for government examination in October, which has shown good efficacy and tolerance in preliminary tests.

 

On Thursday, Bloomberg, citing knowledgeable sources, stating that the United States and China are working on a timetable for a second phase of trade talks. This information was later confirmed by the Chinese Ministry of Commerce.

 

In the economic calendar today, it is worth paying attention to the publication of preliminary data on the PMI of the services and manufacturing sectors in the EU and the USA. Stronger data could put pressure on gold. The US is also expected to publish a report on existing home sales today.

 

On the chart, the situation practically did not change during the day. Trades are held in a very narrow range. Within the day, we expect a moderate decline in quotations towards the level of 1914.00. In case of a breakdown of this mark, we can expect an acceleration of the downward movement with the target at 1875.00.

 

  • Resistance levels: 1952.00, 1971.00, 1993.00.

 

  • Support levels: 1914.00, 1875.00, 1850.00.

 

The main scenario - a decline to 1914.00.

 

An alternative scenario - growth to 1971.00.

 

The current fundamental outlook is neutral. We consider shorts from the levels 1952.00 and 1971.00.

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