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Gold is declining due to increased risk attitude

During the Asian trading session on Monday the price of gold declines amid growing risk attitudes of investors.

 

Asian stocks hit a 29-month high today amid the publication of moderately optimistic macroeconomic data from China and Japan, as well as hopes for further stimulus from global central banks.

 

Data released today showed that the PMI of China's manufacturing sector fell 0.1 points to 51.0. In the services sector, the PMI rose to 55.2, an encouraging sign of a recovery in consumer demand, which has remained below market expectations for several months.

 

The Japanese Nikkei was strongly supported by reports that Warren Buffett's Berkshire Hathaway acquired more than 5% of shares in five of Japan's leading trading companies.

 

In Japan, industrial production in July rose by 8%, against the forecast of + 5.8% and growth by 1.9% in June. But retail sales fell 2.8% year on year, against a forecast of -1.7%. In June, retail sales fell 3.9%.

 

Despite the local decline, the precious metal retains good chances for continued mid-term growth. Gold continues to be supported by a weak USD and concerns over the spread of COVID-19. The number of infected people is steadily increasing. According to Johns Hopkins University, as of August 31, there are more than 25.1 million cases worldwide.

 

The economic calendar today lacks important macroeconomic reports.

 

The bulls have not yet been able to cope with the resistance at 1971.00, but continue to hold the price above 1955.00. The bullish scenario remains the priority. We are expecting a breakdown of the 1971.00 level and the growth of quotations to 1993.00.

 

  • Resistance levels: 1971.00, 1993.00, 2030.00.

 

  • Support levels: 1914.00, 1875.00, 1850.00.

 

The main scenario - a breakdown of resistance at 1971.00 and growth to 1993.00.

 

An alternative scenario - a breakdown of the support at 1955.00 and a decline in the direction of 1914.00.

 

The current fundamental outlook is neutral. We consider longs from the level of 1955.00.

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