Fundamental analytics

Gold: demand for defensive assets continues to grow


Gold completed the trading week with updating its two-month highs amid growing fears about the prospects for the global economy and the weakening dollar. By the end of Friday, the growth of quotations reached 1.4%, and during the week the yellow metal went up by more than 2.4%.

On Monday, gold continued to strengthen, + 0.44%, as investors are still actively buying defensive assets. The main concerns of traders are related to the escalation of conflicts in international trade. On the eve, China and Mexico declared their readiness to continue trade negotiations with the United States, while the White House continues to defend the correctness of its decisions to increase duties on goods from these countries. On Sunday, the Chinese government actually accused Washington of escalating the conflict and evading further trade negotiations, which were actually suspended in May. At the same time, the authorities expressed readiness to return to negotiations.

The Mexican side also took steps to de-escalate the conflict. A delegation went to the USA to discuss migration issues. But Trump is not yet satisfied with this decision. In his Twitter, he wrote that Mexicans have already spoken for 25 years, but they do not take any real action, although, if desired, the problem can be solved in one day. If the Mexican does not do this, all US companies will return to the States, ”Trump added.

Today, news related to international trade and the situation on the stock markets will remain the main drivers of the precious metals market. Among the economic news that may affect the course of trading we should highlight the PMI data for the US manufacturing sector from ISM.

On the chart, trading is now taking place in the area of ​​1310.00. This is a fairly strong level of resistance, from which we can expect the development of a rolling back motion, in the direction of the mark of 1300.00. Accordingly, it is worthwhile to count on the further development of the bullish movement after fixing the price above 1310.00. In this case, the next target for the price movement will be the level of 1318.00.

Resistance Levels: 1310.00, 1318.00, 1325.00;

Support levels: 1300.00, 1289.00, 1278.00.

The main scenario - correction to the area of ​​1300.00

An alternative scenario - consolidation above 1310.00 and growth to 1318.00.

Locally, a strong bullish trend is developing on the market, therefore it is very risky to consider selling. But buying at current prices are also very dangerous, since there is a high probability of the development of correction. Therefore, we recommend while refraining from active trading. It is worth waiting for a strong kickback movement, to the area of ​​1300.00, where you can look for new entry points for long positions.


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