The US dollar remains the main benchmark for gold. On Wednesday, amid a recovery in the dollar (dollar index + 0.3%), gold shows a moderate decline of 0.45%. Traditionally, a stronger dollar reduces buying demand for gold and other commodities as they become more expensive for foreign investors.
Investors also continue to closely monitor the development of the situation on the debt securities market. Yesterday, the yield curve for 10-year government bonds showed a decline from 1.589% to 1.523%. Today the yield has stabilized around the 1.540% mark.
Today, the US House of Representatives is to consider a bill on new measures to stimulate the economy in the amount of 1.9 trillion dollars. The document was previously approved by the Senate. If the House of Representatives approves the document, then President Joe Biden will sign it this week.
In the economic calendar today it is worth paying attention to the publication of data on the consumer price index. Overestimated inflationary expectations of the market are the main reason for the sharp rise in US Treasury yields and the subsequent strong market fluctuations. The rise in consumer price indices may strengthen these expectations and provoke a new increase in volatility on stock exchanges and the foreign exchange market.
On the chart, the price is testing the level of 1720.00. If buyers are able to break through this level, the next target for growth will be the level of 1741.00. The probability of a breakdown of the 1720.00 mark is now quite high.
The main scenario is a breakdown of the resistance at 1720.00 and an increase in the direction of 1741.00.
An alternative scenario is a decline to 1680.00.
The current fundamental background is neutral. We consider longs on a pullback to the level of 1700.00.
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