Gold Analysis 06.02.2019

Gold futures traded in a tight range slipping into the Asian session to see their rebound to a third session in four sessions since April 25 as the US dollar index rose to its highest since January 25 according to the inverse relationship between them After US President Donald Trump delivered a State of the Union speech to Congress in Washington on the eve of economic developments and data expected Wednesday by the US economy, the world's largest economy.

At 04:07 am GMT, gold futures for April delivery fell 0.07% to currently trading at $ 1,318.40 per ounce, compared to the opening at $ 1,319.40 an ounce, while the US dollar index rose 0.03% to 96.10 levels. Fifth low since January 10 compared to the opening at 96.06.

US President Trump's speech on the state of Congress was followed by concern over a new partial closure of the federal government that shines in the shadow of Trump's determination to set up a border wall with Mexico and Democrats refuse to finance it. Otherwise, markets are now looking to read Initial labor cost index which reflects the acceleration of growth to 1.7% compared to 0.9% in the third quarter last.

The US economy is also closely approaching the preliminary reading of US non-farm productivity, which may show growth slowing to 1.7% versus 2.3% in the third quarter, in conjunction with the November trade balance reading, to $ 54.0 billion from $ 55.5 billion last October.

On the other hand, the World Gold Council's statistics last week pointed to the global purchases of gold by the global central banks in 2018 to their highest level since 1967. Purchases rose to 651.5 metric tons, up 74% from 2017 to 375 tons Metric tonnes, with many countries buying gold, topped by Russia, at 274 metric tons, which surpassed China, the world's largest consumer of metals, and inspire both Poland and Kazakhstan.

Global gold consumption rose to 4,345.1 metric tons last year from 4,159.9 metric tons in 2017. Retail investment in bullion and gold coins rose 4 percent to 1,090.2 metric tons, supported by Iran's demand increase of 222 percent to 62 metric tons, Demand for jewelry has stabilized at around 2,200 metric tons with increased consumption compensation in both China, the United States and Russia for lower demand from the Middle East and India.

In contrast, the demand for financial institutions fell by 67% from the year 2017, when the world supply of gold increased 1% to a total of 4,490.2 metric tons in 2018. The gold futures contracts last month made the fourth monthly gain, respectively, illustrated Has seen its longest monthly gains since late 2010, after ending its longest monthly loss march since late 1996.

Technical Analysis

Gold is trading below 1316.65 and Stochastic continues to provide negative signals. The bearish scenario remains valid for the coming period and needs to breach the 1309.00 level to facilitate the move towards our awaited targets starting at 1294.00 and then 1286.70.

We note that a break of 1316.65 will stop the suggested bearish trend and lead the price to resume the short term bullish trend, which is next target at 1335.00.

The trading range for today is among the support at 1296.00 and resistance at 1325.00

The general trend for today is bearish