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Strong dollar limits opportunities for gold recovery

On Friday gold remains under pressure due to the strengthening of the dollar. Since the beginning of the day, the dollar index has risen by more than 0.3%. The focus of the market remains on news related to the consideration in the United States of a new $ 1.9 trillion economic aid program. Dollars.


White House economic adviser Brian Dees said yesterday that: "Without quick action, we risk continuing the economic crisis, which will make it harder for Americans to get back to work and get on their feet." He called on lawmakers to adopt a new package of measures to help the economy as soon as possible. Later, the Speaker of the House of Representatives Nancy Pelosi said that the Democrats are using every opportunity to pass the bill as soon as possible. She noted that the document will be considered by lawmakers next week.


In general, the market is now witnessing a sharp decline in investor risk appetite. Data released yesterday showed that US GDP contracted 3.5% in 2020. This is the largest decline since 1946 since World War II. The situation is aggravated by the fact that the pandemic continues to exert strong pressure on the entire global economy in early 2021, although earlier many experts predicted an improvement in the epidemiological and economic situation due to the start of the use of the COVID-19 vaccine. As a rule, gold is strengthening due to growing economic and geopolitical risks, but now gold is losing competition to the dollar. How long this situation will last is difficult to say. In theory, the new stimulus package for the US economy and the Fed's soft policy will limit the growth of the US currency in the medium and long term. But the demand for the American currency will be determined not only by US domestic policy, but also by the state of the entire global economy.


In the economic calendar today it is worth paying attention to the publication of data on the price index of personal consumption expenditures in the United States and a report on pending sales in the real estate market.


On the chart, the situation has practically not changed over the past day. Trades are still held in the horizontal channel 1824.00-1966.50. Yesterday the price tested the upper border of the side and bounced down quite strongly. Today we are waiting for a decline in quotations to the lower border of the sideways.


  • Resistance levels: 1847.00, 1866.50, 1890.00.


  • Support levels: 1824.00, 1810.00, 1780.00.


The main scenario is a correction to 1847.00 and a decline to 1824.00.


An alternative scenario - growth to 1866.50.


The current fundamental outlook is moderately negative. Shorts remain a priority. We look for entry points at levels of 1847.00 and 1866.50.

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