Fundamental analytics

Gold drops amid rising hopes for a global economic recovery

XAUUSD

On Wednesday, the price of gold declined despite the negative dynamics of the movement of the US Treasuries and USD weakness. Investors are abandoning gold and other defensive assets amid general optimism about the outlook for the global economy.

 

Asian indices hit 3-month highs today. Risk appetite is growing in the market in anticipation of a quick recovery of the global economy after the crisis. On the eve of the IMF experts updated the forecast for global GDP growth. Global GDP is expected to increase by 6.0% in 2021, against the forecast of + 5.5% in January. The US economy will recover at an even faster pace, + 6.4%. IMF experts believe that the United States will become the main driver of global economic growth thanks to active vaccination of the population and unprecedented stimulus measures.

 

The dynamics of the dollar and the declining yield on long-term US government bonds limit the scale of the decline in gold prices. But if the dollar resumes its upward movement, gold could accelerate its decline.

 

Other precious metals are showing mixed trading dynamics. Silver is down nearly 0.4%. Platinum rose nearly 0.7%. Palladium was down nearly 0.7%.

 

The economic calendar today will focus on the minutes of the last FOMC meeting. Investors have changed their expectations regarding the future policy of the Fed and are no longer making aggressive bets on earlier curtailment of stimulus measures. Against this background, the yield on US government bonds resumed their downward movement. The published FOMC minutes may change market expectations.

 

It tested yesterday's resistance level of 1743.00 on the chart. So far, buyers have not been able to break through this mark. Within the day, we are waiting for the development of a downward movement in the direction of the level of 1722.50.

 

· Resistance levels: 1743.00,1753.50, 1773.00.

 

· Support levels: 1722.70, 1706.50, 1680.00.

 

The main scenario is a retest at 1743.00 and a decline in the direction of 1722.70.

 

An alternative scenario is a breakdown of resistance at 1743.00 and an increase to 1753.50.

 

The current fundamental background is moderately negative. We consider shorts from the level of 1743.00.

 

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