Break of the 2000 level by gold will be confirmed after it will be tested from the top to the bottom

As it was mentioned in the previous forecast, gold made another attempt to break through $2,000 per ounce. Compared to the upward impulse of March, this time trading closed above the significant level, opening the way for gold to move into the area of historical highs just above 2070. However, before that, according to the principles of technical analysis, the price should test the passed level from the opposite side (in this case - from the top to the bottom), after which the breakdown can be considered as confirmed one.

From a fundamental point of view, the prospects for gold remain positive. Yesterday the yellow metal, although it did not show a significant growth, successfully served as a safe-haven asset. Market participants' need for protection intensified after the release of statistics on business activity in the U.S. Both manufacturing and services PMIs fell below forecasts. The ISM service sector PMI data was especially negative, falling sharply from 55.1 to 51.2 with expectations of 54.5.

MUFG Bank economists underlined the negative impact of tightening credit conditions on economic activity. At the same time, the tightening began even before the March shocks in the banking sector. Economists believe that the declining economic indicators in the U.S. will cause a further decline in the American currency. This may additionally support gold quotes, as well as expectations of monetary policy easing by the Fed and other central banks.

Fundamentally, gold really looks strong. However, this fact does not exclude the possibility of a small correction before a new wave of growth. In addition to the high probability of testing the 2000 level from the top to the bottom a reversal pattern "evening doji star", formed at the end of yesterday's trading on the daily gold chart, also favors a local decline.

In this case it is worth to be careful and if it is possible to not transfer open positions to the next day, because tomorrow trading in the U.S. and European stock exchanges on the eve of Easter will not be held.

The following trading strategy option can be suggested:

Sell gold in the range of 2015-2020. Take profit – 2000. Stop loss – 2030.