Gold traded moderately 0.25% higher on Friday, thanks to a weaker dollar.
The dollar index came under pressure after the release of information that US Treasury Secretary Stevin Mnuchin demanded from the Fed to return unspent funds in the amount of $ 455 billion allocated to fight the pandemic. The corresponding letter was sent by the Ministry of Finance to the Federal Reserve. The negative reaction of the market is connected with the fact that now these funds are used by the FRS within the framework of the credit program, which is aimed at supporting businesses, non-profit organizations and local authorities. Many experts rate this program as very successful. The Fed responded that they would like to fully spend the funds that were allocated as part of the program to help the economy.
Later, the dollar will be able to win back some of the lost positions, limiting further growth in gold. The market has responded to statements by Senate Majority Leader Mitch McConnell, who has agreed to resume talks with Democrats on a new economic aid package amid the COVID-19 pandemic. But in the medium term, this news could have a positive impact on gold, as the launch of a new bailout program will weaken the dollar and make the precious metal cheaper for holders of other currencies.
Today, there is no important news in the US economic calendar, so the market is likely to follow the news of politics.
The chart shows a pullback movement from the support at 1853.00, but the bears are still holding the price below the 1870.00 level. Therefore, the bearish movement scenario remains the priority today. We are waiting for a decline in quotations under 1848.00.
The main scenario is a decline below 1848.00.
An alternative scenario is a breakdown of resistance at 1870.00 and growth to 1884.00.
The current fundamental outlook is moderately negative. We consider shorts from the level of 1870.00.
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