On Monday, gold is recovering after a massive sell-off on Friday, when the price renewed its 8-month low of trading. Gold finished February with the strongest decline since November 2016 amid a rapid recovery in US and other government bond yields. Investors expect increased inflationary pressures, which could lead to an earlier tightening of monetary policy by the Central Bank and a gradual curtailment of stimulus measures. In fact, the growth in the yield of government bonds in many countries indicates the end of the cycle of lowering interest rates. As a rule, the rise in inflationary expectations increases the demand for gold as a defense asset, but in the current situation the precious metal cannot compete with government bonds, which have a guaranteed yield percentage.
On Friday, the US Commodity Futures Trading Commission announced that investors have cut their bullish positions in gold and silver contracts on COMEX.
Today's growth in gold is due to the influence of technical and fundamental factors. First, many investors have taken short positions in gold after updating 8-month lows. Secondly, today the US dollar demonstrates stable trading in a narrow range. But the prospects for the development of an upward movement remain limited due to the upward dynamics of the movement of major stock indices.
Following gold, other precious metals are recovering today. Silver has recovered by more than 2%. Platinum jumped nearly by 4%. The price of palladium is up by 1%.
In the economic calendar today, the focus will be on the PMI data for the manufacturing sector in Germany and the United States.
A correctional movement is developing on the chart today. The price is approaching the nearest strong resistance level of 1760.00. At this point, we are waiting for the formation of topping signals and the resumption of downward movement.
The main scenario is an increase to 1760.00 and a downward reversal.
An alternative scenario is a breakdown of resistance at 1760.00 and an increase to 1780.00.
The current fundamental outlook is neutral. We consider shorts from the level of 1760.00.
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