Fundamental analytics

Gold remains under pressure.


Gold completed the last trading week almost at the level of its opening weekly price, but locally retains a tendency to decline.

On Friday, the main pressure on the yellow metal put the situation on the stock markets, where global indices were trading in the green zone, indicating an increased investor interest in risky assets. In the USA, the corporate reporting season started, which provided strong support to the US stock market. Reports of the country's largest banks JPMorgan Chase and Wells Fargo came out better than market expectations, triggering a rise in major indices from 0.5% to 1%. Gold is among the defensive assets, so it is always under pressure with high investor interest in risky assets.

The quotation of gold on Friday was supported by the American dollar, whose index ended trading in the red zone, but this was not enough to reverse the downward price movement.

Today, gold is still trading in the red zone. The pressure on the price is exerted by the situation in the stock market, where investors continue to have a heightened interest in risk. Markets positively assess the new comments of the White House representatives on the course of trade negotiations between the United States and China. On the eve, Stephen Mnuchin noted that negotiations are proceeding very successfully and are approaching the final stage.

At the same time, there are news on the market that can support gold locally. Firstly, investors are increasingly worried about the aggravation of trade relations between the US and the EU. On the eve, the media reported that the European Union is preparing a draft of the introduction of increased duties on US goods in response to subsidies by the United States to Boeing. The United States, for its part, calls this response to EU subsidies for Airbus.

Secondly, the financial markets may be affected by a new criticism of President Trump to the Fed. On Sunday, Trump wrote a new tweet in which he accused the Fed of weak growth in the economy and stock markets. The media reported that Trump wants to nominate candidates for leadership positions at the Fed who support the president’s opinion on the need for a softer monetary policy that could affect future actions of the financial regulator.

On the chart, the bearish wave continues, which is now testing for strength the lower limit of the support area, formed between the levels of 1287.50-1294.00. If buyers fail to keep this level, and the likelihood of such a development is very high, the next target for the price will be the 1283.50 and 1276.50 marks.

 Resistance Levels: 1294.20, 1310.00, 1317.00;

 Support levels: 1287.50, 1283.50, 1276.50.

The main scenario is a decline to 1283.50 and a correction to 1294.00.

Alternative scenario - support breakdown at 1283.50 and decline to 1276.50.

The fundamental background in the market continues to support sellers. On the chart, we receive more and more signals in support of the scenario with the further development of the downward movement, therefore, within the day, we give priority to shorts that are to be found near the level of 1294.20.

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