Fundamental analytics

Gold declines under pressure from the dollar and news from Japan


Gold starts a new trading week with a decline of more than 1.7%, amid a significant drop in demand for risk-free assets.

On Sunday, at the G20 summit in Japan, a meeting was held between US President Donald Trump and Chinese leader Xi Jinping, at which an agreement was reached on a truce in a protracted trade war. Following the meeting, the parties announced the resumption of bilateral negotiations. The United States indefinitely postponed plans to introduce duties on Chinese goods and allow some US companies to sell high-tech equipment to Huawei, and China promised to start buying US agricultural products in large volumes.

Despite the fact that the parties failed to achieve significant progress in resolving all trade disputes, news from Japan significantly increased investor interest in riskier assets, which always has a negative impact on the dynamics of gold. Investors even ignored weak data from China, where, according to Caixin, the manufacturing sector PMI dropped from 50.2 to 49.4 points, indicating a decline in orders and production against the backdrop of the US-China trade standoff.

Today, in addition to geopolitical news, economic statistics data can have a fairly strong influence on the market. In the US and the EU, PMI data for manufacturing sectors will be published today, which may affect the dynamics of the dollar index, which has strengthened by more than 0.4% since the beginning of the day, putting additional pressure on the value of the yellow metal.

On the chart, the price declined to a rather strong support level - 1383.00, from which we can expect a resumption of the upward movement to 1403.00. Accordingly, the scenario with the continuation of the bearish correction will be relevant only after price fixing below 1383.00.

Resistance Levels: 1403.00, 1425.00, 1436.00;

Support levels: 1383.00, 1360.00, 1332.00.

The main scenario - growth to 1403.00.

An alternative scenario - consolidation below 1383.00 and a decline to 1360.00.

Negative news background dominates the market locally, but on the chart the price has reached a strong support level from which we can expect a resumption of upward movement. Therefore, we give preference longs from the level of 1383.00.

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