Gold Analysis 09.09.2019

Gold futures fluctuated in a narrow and bullish range during the Asian session to witness the rebound to the second session from the lowest since August 23, ignoring the positive stability of the US dollar index for the first time in five sessions according to the inverse relationship between them following the developments and economic data that followed BEIJING - China's economy is the world's largest consumer of minerals amid tight economic data on Monday by the world's largest economy.

Gold futures for December delivery rose 0.48% to currently trade at $ 1509.11 an ounce compared with the opening at $ 1504.21 an ounce, while the US dollar index rose 0.01% to 98.43 compared to the opening at 98.42.

On Sunday, we were followed by the Chinese economy, the second largest economy in the world, the release of the Trade Balance Index, which showed that the surplus shrank to 240 billion yuan ($ 34.8 billion) from 310 billion yuan ($ 45.1 billion) in July, worse than forecasts. The surplus shrank to 300 billion yuan, or $ 44.3 billion, as exports fell less than forecasts, which slowed growth and imports fell less than expected.

The worsening trade war between the world's two largest economies has recently reinforced investor fears about the pace of US and Chinese growth and the global economy as a result of the US administration's growing trade protectionism with many countries, led by China. The United States and China resumed their trade negotiations by early next month in Washington to ease market concerns.

The People's Bank of China (PBOC) announced Friday that it will cut banks 'mandatory reserve rate by 50 basis points from September 16, and is seeking to expand some banks' cuts to about 100 basis points. The reserve requirement will go through two phases of 50 basis points each, stating that the cut will provide liquidity of 900 billion yuan.

On the other hand, the Japanese Cabinet Office released today the final seasonally adjusted GDP figure which showed growth slowed to 0.3%, in line with expectations, compared to 0.4% in the previous quarter and 0.6% in the first quarter. The annualized GDP reading measured by prices stabilized at 0.4%, also in line with expectations and against 0.1% growth.

In the same context, the seasonally adjusted annualized final GDP showed growth slowed to 1.3%, in line with expectations, compared with 1.8% growth in the prior quarter's prior year and 2.2%. This came in conjunction with the current account reading showing the surplus narrowed to 1.65 Trillion yen versus 1.94 trillion yen in June, worse than expectations that the surplus shrank to 1.70 trillion yen.

Technical Analysis

Gold is showing more bearish bias to test the 1508.30 level, and SMA 50 is forming a continuous negative pressure against the price, so we expect the decline to continue during the coming sessions to test 1493.80 as the next major stop.

Therefore, we are waiting for more negative trading today, keeping in mind that a breach of 1531.75 will stop the current negative pressure and lead the price to resume the bullish main trend again.

Expected trading range for today is between 1493.00 support and 1524.00 resistance.

Expected trend for today: Bearish.