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Dollar puts strong pressure on gold

On Thursday, gold continues to move down due to a large-scale strengthening of the USD. The gold price is at 2-month trading lows.

 

USD gained support after the publication of strong data on the real estate market and the weakening of its main competitors (EUR, GBP, JPY). Investors are revising their forecasts for the economic recovery of the EU and the UK for the worse amid the development of a new wave of the coronavirus pandemic, due to which quarantine measures have been strengthened. Preliminary PMI data has raised serious concerns about the outlook for an EU economic recovery, while PMIs are holding well above 50.

 

Against this background, many investors again turned their attention to the dollar, considering it as a defensive asset. Gold and other commodity assets are becoming more expensive for foreign investors, which has led to a significant decrease in demand. The dynamics of the movement of the dollar index is now the determining factor for gold.

 

In the economic calendar today it is worth paying attention to the IFO indexes for Germany.

 

In the US, the focus will be on recent new home sales data. The next speech by the head of the Fed Jerome Powell in the Congress is likely to have a very weak impact on trading. In recent days, Powell has made a lot of speeches and it is unlikely that he will provide the markets with new information for thought today.

 

On the chart, the price reached the previously marked target at 1853.00. This is a fairly strong support level from which a rollback movement can be expected to develop. From the current position, we expect a moderate growth in quotations towards the level of 1875.00. Fixing the price below 1853.00 will open the way for the bears to 1793.00.

 

  • Resistance levels: 1875.00, 1903.00, 1921.00.

 

  • Support levels: 1853.00, 1810.00, 1793.00.

 

The main scenario - growth to 1875.00.

 

Alternative scenario - a consolidation below 1853.00 and medium-term decline in the direction of 1793.00.

 

The current fundamental outlook is moderately negative. We expect long signals with very moderate risks from the level of 1853.00.

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