Gold Analysis 13.02.2019

Gold futures fluctuated in a narrowly bullish range during the Asian session as the US dollar index fell for the second consecutive session from its highest since Dec. 17 according to the inverse relationship between them following a talk by Federal Committee member and Kansas City Federal Reserve Chairman Esther George on the economic outlook at the Kansas City Public Library and on the eve of developments and economic data expected Wednesday by the US economy, the largest economy in the world.

Gold futures for April delivery rose 0.15% to currently trade at $ 1,316.20 per ounce, compared with the opening at $ 1.314.30 per ounce, amid the decline of the US dollar index 0.05% to 96.65 levels. Higher in two months compared to the opening at 96.73.

On Tuesday, US President Donald Trump expressed China's willingness to reach an agreement, adding that a huge team in China was seeking a mutual agreement and that his administration was closely watching the official talks on Thursday and Friday between US Treasury Secretary Stephen Manochin and the Trade Representative Robert Laetizer in Beijing with Chinese Vice Premier Liu Hu who visited the United States at the end of last month.

Trump confirmed that he would not meet with his Chinese counterpart Xi Jinping before the end of this month, but that while there may be a joint meeting to ratify the trade agreement, saying that the extension of the truce deadline may be used beyond the beginning of next March to reach a trade agreement, unlike Trump also noted that he was looking forward to working with the Democratic and Republican parties to reach agreement on the budget, and ruled out the possibility of another partial closure of the federal government.

In another context, Federal Reserve Governor Jerome Powell also noted yesterday that the economic data confirm that the US economy is in a good position and that unemployment rates are stabilizing at the lowest level in half a century, with the fact that some groups in American society are not feeling well after, and that the reflection of interest movements on the markets takes some time, saying he did not see the risks of economic recession high.

Responding to questions from reporters at the Hope Foundation's Rural Policy Forum in Mississippi after Powell delivered his speech, "Economic Development in Rural Rural Communities," Powell said that increasing labor market participation is a high priority for the Federal Reserve, The US is approaching full employment levels.

Investors are now eyeing what inflation data for the world's largest economy will produce with the CPI reading, which could reflect 0.1% growth versus 0.1% contraction in December, while the core reading of the index itself may show a 0.2% Slightly lower than in December. The annualized reading may reflect a slowdown in growth to 1.5% from 1.9%.

In the same context, the annual Core CPI reading may show a slowdown in growth to 2.1% versus 2.2% in the previous December reading before we see the US Treasury Department reading the Treasury budget, which may reflect a contraction of the deficit to its value 10.5 billion compared with 204.9 billion last November.

On the other hand, the statistics of the World Gold Council at the end of last month to the rise of purchases of global central banks of gold in 2018 to their highest level since 1967, where purchases rose to 651.5 metric tons, up 74% from what it was in 2017 when it reached (374 metric tons), with the demand of many countries to purchase the yellow metal topped by Russia by 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 testing the resistance of the bearish intraday channel, and the price needs to stabilize below 1316.65 to keep the downside scenario effective for the next period, targeting the levels of 1300.00 then 1286.70 mainly.

Keep in mind that a break above the mentioned descending channel might do a bullish flag pattern that has the potential to shift the intraday upside move, beginning with the positive targets at 1242.00 and extending to 1365.05.

The trading range for today is among the support at 1286.00 and resistance at 1320.00

Support and resistance:

Support: 1308.00-1301.30-1294.67

Resistance: 1316.65-1321.47-1333.00

The general trend for today is bearish