The eurozone, Germany and Frances’s manufacturing orders and manufacturing production reports seem to have disappointed investors, thus confirming that the European economy is suffering from a major recession and production decline. At the same, time, yesterday’s US employment stats came out fairly positive, thus reassuring investors.
Judging by the current pace of the US economic recovery, we may assume that the US dollar will be strengthening in the short run, thus pressing the market of precious metals, especially gold and silver. After the US T-bond yield increased not so long ago, some investors switched from gold to US bonds. Uncertainty over China’s economic growth prospects and higher gold duties in India keep restraining the demand for physical gold, thus pressing gold prices.
According to the Commodity Trading Department, gold is currently rallying. But the rally may be a short-term one, especially if an H1 bar closes below 1642. The closest levels of support are 1635-1638. If the price consolidates above 1648, it will resume the rally with targets around 653-1656, and maybe 1665.
The demand for gold also increased yesterday. Today the price will probably be testing yesterday’s levels of demand. A break and consolidation below 31.30 will trigger the downward scenario with probable targets around 31.0, 30.65, 30.25. Otherwise, the price may well resume its rally up to 31.75-31.85
