Gold remains in the green zone on Wednesday amid declining Asian indices. South Korean Kospi fell by 3%, Japanese Topix lost 1.2%, Nikkei Stock Average slipped by 2.3% (dropped to a minimum value since December 2018), Australian S&P / ASX 200 lost 3.6%, Hong Kong Hang Seng lost 0.6%, while the Chinese Shanghai Composite fell 0.2%.
The market is declining on concerns related to the prospects for the development of the global economy in the context of the spread of the coronavirus epidemic. Many investors are not convinced that global fiscal stimulus measures can radically change the situation, and believe that the global economy is on the verge of another crisis.
Under these conditions, gold remains the most attractive asset for investment. Against the background of a decline in world indices, the precious metal has risen in price by 8.7% since the beginning of the year and retains good prospects for further growth.
In the economic calendar today, the US inflation report will be in the spotlight. Perhaps this data will be able to change investors' expectations regarding the FRS further actions to adjust the basic parameters of monetary policy.
Regarding the chart, the situation remains rather uncertain. Bears still can’t push through support at the level of 1650.00. Therefore, the prospects for the development of corrective movement remain limited. Another fairly strong level of resistance is 1680.00 which will be hard for bulls to overcome. We are expecting a consolidation in the range of 1650.00-1680.00.
Resistance Levels: 1680.00, 1700.00, 1720.00;
Support Levels: 1650.00, 1635.00, 1605.00.
The main scenario - consolidation in the range of 1650.00-1680.00.
An alternative scenario - a breakdown of support at the level of 1650.00 and a decline towards 1635.00.
The fundamental outlook is moderately positive. We would prefer to trade around the borders of the range of 1650.00-1680.00.