Gold, like other commodity assets, enters the trading week with a decline. Investors are reacting negatively to news of a sharp increase in the number of people infected with COVID-19 in Europe and America. The demand for the American currency (dollar index + 0.17%) has sharply increased with which gold has a very close inverse correlation.
The United States has the highest number of new cases of COVID-19 for two days in a row. A record increase in the incidence was reported in France and Russia. The number of infected is growing in Italy, where restrictions on the operation of bars and restaurants have been introduced. Spain has declared a new state of emergency.
US House Speaker Nancy Pelosi said Sunday that she is awaiting a response from the White House on Monday regarding the latest stimulus spending plan. Most experts still doubt that an agreement can be reached this week.
At the beginning of the European trading session, gold is trying to recover some of the lost positions due to the decline in stock indices, but a strong dollar will likely limit the possibilities for recovery.
In the economic calendar today it is worth paying attention to the publication of IFO indices for Germany and statistics on new home sales in the United States.
The price is still holding in the horizontal channel 1892.00-1930.00, but the bears are gradually increasing pressure on the lower boundary of the flat trend. As a priority today we consider the scenario with the breakdown of the level of 1892.00 and a decline to 1875.00.
· Resistance levels: 1930.00, 1937.00, 1967.00.
· Support levels: 1892.00, 1875.00, 1867.00.
The main scenario is a breakdown of support at 1892.00 and a decline to 1875.00.
An alternative scenario is a consolidation in the range of 1892.0-1930.00.
The current fundamental outlook is moderately negative. We consider shorts from the level of 1903.00.