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Gold declines amid dollar recovery

After renewing 6-day highs of trading, gold resumed its downward movement. The precious metal has lost 0.43% today. The decline is due to a USD recovery and growth in the yield of US Treasuries. Gold has a very close inverse correlation with these instruments.

Joe Biden on Thursday immediately signed into law a new $ 1.9 trillion law to support the economy amid the COVID-19 pandemic. In a televised address, Biden also promised to speed up vaccination of the population and return the country to "normalcy" by July 4.

The speculation on the topic of increasing inflationary pressures in the United States against the backdrop of large-scale new fiscal stimulus measures is again growing on the market. Sales of US government bonds have strengthened and today the yield on 10-year bonds from yesterday's low of 1.475% rose above 1.5%, supporting the dollar.

Against the background of the strengthening of the dollar, prices for other precious metals also demonstrate the downward movement dynamics. Silver prices are down more than 1% today. Platinum shed 0.2% of its value, while palladium dipped 0.5% from Thursday's close.

A new bearish wave is developing on the chart from the level of 1741.00. The price is already below the level of 1720.00, indicating a continuation of the downward movement towards 1700.00.

  • Resistance levels: 1726.00, 1741.00, 1760.00.
  • Support levels: 1700.00, 1680.00, 1670.00.

The main scenario is a decline to 1700.00.

An alternative scenario is a breakdown of resistance at 1726.00 and growth to 1741.00.

The current fundamental background is negative. We consider shorts on a pullback to the levels of 1720.00 and 1726.00.

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