On Tuesday, gold is moving in different directions, holding in a narrow range near the opening price of the day. The negative impact is exerted by the American dollar (dollar index + 0.35%), but this pressure is offset by fears associated with the spread of COVID-19 and the prospects for the development of the global economy.
The strengthening of the American currency is taking place due to the weakening of its main competitors - EUR and GBP. Investors cut long positions in euros in anticipation of the ECB meeting. Demand for the British pound is falling due to the increased risks of a tough Brexit scenario after new statements by Prime Minister Boris Johnson.
Despite the strong growth of the dollar, gold maintains its current position in the market amid growing fears about the further pace of global economic recovery. According to data released today, in the second quarter, the GDP of the third largest economy in the world (Japan) fell by 28.1% compared to the same period last year. Recent data from Europe also indicate a gradual slowdown in economic recovery in the region.
Another incentive to buy gold and other defensive assets is the US-China trade conflict. The New York Times today released information that the United States may ban the import of cotton products from China's Xinjiang province. The decision is motivated by the violation of human rights in the region.
The economic calendar today lacks important macroeconomic reports.
The situation on the chart has practically not changed over the past day. The price is still in the middle of the flat channel of 1914.00-1947.00. Today we can see the continuation of the flat trend.
The main scenario - a consolidation in the range of 1914.00-1947.00.
An alternative scenario - a breakdown of the support at 1914.00 and a medium-term decline towards 1875.00.
The current fundamental outlook is neutral. Within the day, we consider both longs and shorts of the instrument from the borders of the 1914.00-1947.00 flat.
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