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Demand for gold and other defensive assets remains consistently high

Gold starts a new trading week with moderate growth. Investors are reacting to the weakening US dollar and news of record daily COVID-19 gains over the weekend.

The US dollar remains under strong pressure due to the strengthening of the main currencies of competitors, political and economic uncertainty in the United States. Gold and other commodity instruments are denominated in US currency. Due to the weakening of USD, gold is becoming cheaper and more accessible to investors.

 

Strong demand for defensive assets is supported by reports of the active spread of the coronavirus pandemic. At the weekend, a new daily increase was recorded - 307.4 thousand people. Most of all new cases of infection were recorded in India - 94.3 thousand people. In the USA and Brazil, it is 2 times less. Spain is in fourth place - 12.1 thousand people. Many countries are considering options to tighten quarantine measures to contain the infection. At the end of last week, Israel became the first developed country to reintroduce a nationwide quarantine to contain the new wave of coronavirus.

 

The high geopolitical uncertainty in the world has a positive impact on gold. Several important events are now in the focus of attention: the conflict between the United States and China, the Brexit negotiations, the election of a new Japanese prime minister and negotiations on a new package of measures to help the US economy.

 

There is no important news on the economic calendar today. Geopolitical news will have a key influence on trading.

 

Gold is consolidating in a narrow range. Buyers are holding the price above 1940.00. Today we are expecting a retest of the 1967.00 level.

 

  • Resistance levels: 1967.00, 1993.00, 2030.00.

 

  • Support levels: 1940.00, 1914.00, 1900.00.

 

The main scenario - growth from the current levels.

 

An alternative scenario - a decline below 1940.00 and a fall to 1914.00.

 

The current fundamental outlook is moderately positive. We consider longs with very moderate risks from the level of 1940.00.

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