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Gold price could fall below $ 1700

Gold is trading mixed on Thursday. The precious metal is still under pressure from the growing yield of US government bonds and the US dollar. The situation on the stock markets acts as a support factor. Major indices are holding in the red today.

On Wednesday, the 10-year US government bond yield curve climbed to 1.498%. Today the profitability level is kept close to this level. The growing yields on US government bonds make gold a less attractive investment asset.

Speaking to reporters on Wednesday, Chicago Fed President Charles Evans said that the growth in US government bond yields does not bother the Fed, as this growth is a reflection of the improvement in the economy. Investors are now awaiting comments from Fed Chairman Jerome Powell, who will later speak at an event organized by the Wall Street Journal.

Local support for gold is provided by the situation on the stock markets, where the main indices show a downward movement vector, indicating a reduced interest of investors in risky assets. But it is unlikely that gold will be able to extract big dividends from this, since the decline in shares is due to the growth of yields on government bonds.

In the economic calendar, in addition to Powell's speech, it is worth noting the publication of weekly data on the number of initial applications for unemployment benefits in the United States.

On the chart, the situation has not fundamentally changed. The downward movement remains the priority. Yesterday the price once again renewed its local minimum. With a very high probability today we can expect a decline in quotations below the level of 1700.00.

  • Resistance levels: 1720.00, 1725.00, 1741.00.
  • Support levels: 1707.00, 1695.00, 1680.00.

The main scenario is a decline from current levels below 1700.00.

Alternative scenario - growth to 1725.00 and downward reversal.

The current fundamental background is moderately negative. We consider shorts from the local resistance levels of 1720.00 and 1725.00.

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