Gold Analysis 10.12.2018

Gold futures fluctuated in a tight range in the Asian session, the highest since July 11, as the US dollar index fell to its lowest level since November 22, according to the latest economic developments. The world's largest consumer of metals and its Japanese counterpart, the world's third largest economy, on the brink of economic developments and data expected Monday by the US economy, the world's largest economy.

Gold futures for February delivery rose 0.14% to currently trade at $ 1,254.30 an ounce, the highest in five months compared to the opening at $ 1,252.60 an ounce, amid the decline of the US dollar 0.07% Levels of 96.44 and the lowest in three weeks compared to the opening at 96.51.

We have followed the Chinese economy reading the trade balance index, which showed a surplus of 306 billion yuan, or 44.7 billion yuan, compared to 234 billion yuan, equivalent to 34.0 billion dollars last October, contrary to expectations that the reduction of surplus To 227 billion yuan, or $ 36.2 billion, as import growth slowed to a slower pace than last month's export growth.

We also followed the Chinese economy to reveal inflation data with the release of the annual consumer price index, which showed a slowdown in growth to 2.2% compared to 2.5% the previous annual reading for the month of October, below expectations of 2.4%, and the annual reading of the PPI slowdown Growth to 2.7% compared to 3.3% in the previous annual reading, also below expectations at 2.8%.

This came before the Japanese economy saw the seasonally adjusted GDP GDP rise, which showed a contraction of 0.6% compared to the previous third quarter reading, which showed a contraction of 0.3% and 0.7% growth in the previous quarter, worse than expected. Indicated a contraction of 0.5%.

The seasonally adjusted annual GDP reading of the world's third-largest economy also showed contraction to 2.5% compared to the previous third quarter preliminary reading, which showed a 1.2% contraction versus 3.0% annualized growth in the second quarter, also worse than expected To a contraction of 2.0%.

In the same context, the annualized reading of GDP showed a stable contraction of 0.3%, unchanged from the previous preliminary reading of the third quarter, in line with expectations, and against 1.0% growth in the second quarter. This coincided with the release of the current account which showed The spread narrowed to 1.21 trillion yen from 1.33 trillion yen in September, worse than the 1.29 trillion yen forecast.

On the other hand, investors are looking for the US economy to publish a statistical reading employment opportunities and job turnover, which may reflect a rise to 7.22 million versus 7.01 million in September, coming hours after the disclosure of labor market data for the last month which showed that showed stability rates Unemployment at its lowest since 1969 at 3.7% for the third month in a row, consistent with expectations.

In the same context, the average hourly earnings report showed growth accelerated to 0.2% from 0.1% in October, below expectations of 0.3%, while the Non-Farm Employment Change Index showed a slowdown in job creation to 155,000 added jobs 237 thousand jobs added in October, worse than expectations for 198 thousand added jobs.

The growing concern over tensions between Washington and Beijing after Chinese Foreign Minister Terri Pranstad's call to the US ambassador to protest against the arrest of Huawei's chief financial officer in Canada, which could be handed over to the United States, which accuses Iran of violating its economic sanctions against Tehran, Investors and push them into safe havens, topped by gold.

Technical Analysis

Gold continued its bullish path in the medium term as it reached the upper limit of the up channel it has been trading since 16-08-2018

The resistance level is at 1251.32, where gold is expected to face resistance at this level and a rebound towards to the level 1238.30. especially that this level is at 38.2% Fibonacci retracement of the long downtrend that started on 11-04-2018. And the SMA 7 is at this level.

Thus, the bullish trend will be expected in the coming period if the 1238.30 level is not broken and stability below it.

If gold breaks the resistance level 1251.32 it will stimulate the bulls and push them to form more pressure on the price to rise towards the target 1262.80.

In case that happen we will wait to see the price movement  at that level to see if gold is in a new bullish path or is in a correction path for the downside move, we talked about as the 1262.8 level is at Fibonacci retracement of 50%.

Moving averages move up in an ideal arrange and the SMA 7 moves with the price giving it stability in the upsidetrend.

The Stochastic is moving sideways within the overbought area in a reversal of the bullish movement and we are watching any exit from this level as it will push it to the downside.

The trading range is among the key support at 1238.40 and the key resistance at 1262.80.

Support and resistance:

Support: 1238.30-1227.4-1221.90;

Resistance: 1251.30-1257.00-1262.8.