On Monday, gold increased in price by more than 3%. Today it maintains an upward movement vector, despite the fact that stock indices are traded in the green zone. The dynamics of the USD (index decreased by 0.3%) and the risks associated with the spread of the coronavirus pandemic contribute to the growth of quotations.
Despite the first signs that quarantine measures taken in many countries help slow down the spread of coronavirus, the situation in financial markets remains tense. It is obvious that even if the pandemic decreases and quarantine measures are lifted at the end of April, the global economy will recover from the shock received for a long time. JP Morgan believes that the recession in the US economy may be stronger than during the 2008 crisis. The economy can sag by 35%, and the unemployment rate in the moment will reach 14%.
Obviously, considering the above, the market will maintain a steady demand for gold and other protective assets, even despite the local recovery of stock indices.
Today, the publication of important macroeconomic reports is not expected, therefore the main influence on gold will be exerted by USD and the situation on stock exchanges.
Regarding the chart, today it is worth paying attention to the level of 1657.00. This is a key intraday support level. As long as the price remains above that mark, the option of an upward movement development in the direction of the level of 1680.00 remains. In case of a breakdown of support at the level of 1657.00, we should expect a retreat towards the level of 1645.00. Only after this the upward movement can be resumed.
Resistance Levels: 1680.00, 1700.00, 1720.00;
Support Levels: 1657.00, 1645.00, 1610.00.
The main scenario - growth towards the level of 1680.00 from current levels.
An alternative scenario - a breakdown of support at the level of 1657.00 and a decline towards 1645.00.
The fundamental outlook is moderately positive. Bullish signals still prevail on the chart, so within the daily framework, we consider longs from the levels of 1657.00 and 1645.00.