Gold hit a fresh 4-day high today thanks to a weaker dollar. The restraining influence on the price is exerted by the stock indices movement dynamics that are mainly in the green zone.
The US dollar came under pressure amid growth in other currencies. Investors reacted positively to news of the largest free trade agreement between ASEAN countries, as well as the publication of encouraging macroeconomic statistics in Japan and China. Despite the problems in the US and Europe, China's economy continues to show strong growth rates. In October, industrial production rose by 6.9%, while experts predicted a more modest growth of 6.5%. Above market expectations were also preliminary data on Japan's GDP. After a 8.2% decline in the 2nd quarter, in the 3rd quarter, annual GDP recovered to + 5.0% (+ 4.4% forecast).
All of this news has significantly increased investor risk appetite and contributed to the growth of other currencies against the dollar. Gold is in inverse correlation with the US dollar, so it is still holding in positive territory, but the growth of investors' risk appetite significantly limits the possibilities for further growth in gold, so the current fundamental background can be described as neutral.
Investors also continue to follow the news about COVID-19 Over the weekend, many countries recorded record data on the daily increase in cases. The US and Europe may increase quarantine measures, which could seriously aggravate the economic situation in these regions.
Bullish signals predominate locally on the chart. The price is holding above the level of 1884.00, maintaining good chances of growth towards 1915.00.
The main scenario is growth in the direction of 1915.00
An alternative scenario is a decline under 1884.00 and a retest at 1867.00.
The current fundamental outlook is neutral. We consider longs in the area around the level of 1884.00.
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