On Monday, gold is trading mostly in the green zone. Investors are buying defensive assets amid growing concerns about the outlook for a global economic recovery and the spread of a new wave of the coronavirus pandemic.
In recent weeks, there has been a sharp increase in the number of cases of COVID-19 in Europe. In some countries of the region, records have been set for the daily registration of new cases of infection. EU countries are gradually increasing quarantine measures. Over the weekend, in an interview with the Wall Street Journal, the ECB's chief economist said the new wave of coronavirus threatens the region's economic recovery prospects. The situation will remain uncertain until the virus is brought under control.
Another driver of growth in demand for defensive assets remains the domestic political uncertainty in the United States. Over the weekend, both Republicans and Democrats rejected a White House proposal for a new $ 1.8 trillion economic bailout program. Democrats want to increase spending to $ 2.2 trillion, while Republicans do not want to increase spending by more than 1.5 trillion. The likelihood of reaching agreement on a new stimulus package before the US presidential election is almost zero.
There is no news on the economic calendar today that could have a strong impact on gold. The main influence on the trades will be provided by political news from the US and fluctuations in the dollar rate.
Buyers are holding prices above 1920.00. Upward movement remains a priority. The closest target is the level of 1937.00. In case of a breakdown of this mark, we expect the growth of quotes to 1967.00.
The main scenario is a breakdown of resistance at 1937.00 and growth in the direction of 1967.00.
An alternative scenario - consolidation below 1920.00 and a decline to 1898.00.
The current fundamental background is moderately positive. Consider buying in the area of the level of 1920.00.
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