Gold Analysis 11.09.2019

Gold futures fluctuated in a narrow, bullish range during the Asian session to rebound for the second session from the lowest since August 13 amid the decline of the US dollar index for the seventh consecutive session from the highest since May 12, 2017 according to The reverse relationship between them on the eve of developments and economic data expected on Wednesday by the US economy, the largest economy in the world.

At 04:20 am GMT gold for December delivery rose 0.61% to trade at $ 1492.15 an ounce, compared with the opening at $ 1486.11 an ounce. The dollar index fell 0.01% to 98.33 compared to the opening at 98.34.

Investors are awaiting the US economy to reveal the PPI reading, which is a preliminary indicator of inflationary pressures that may reflect a steady acceleration at zero levels against 0.2% growth in July, while the core reading of the index itself may show stable growth at 0.2%. The annualized reading of the same index could show growth stabilizing at 1.7%.

In the same context, the core annual PPI reading may reflect a 2.2% vs. 2.1% advance in July, before we see the final release of the wholesale inventory index, which could show a stable growth of 0.2%, little changed from The initial reading for the month of July and against the stability at zero levels last June.

Yesterday, US Treasury Secretary Stephen Mnuchin said that the upcoming US-China trade talks by early October in Washington will focus on the value of the Chinese yuan, adding that the Governor of the People's Bank of China may attend. That round of talks comes after the Chinese currency recently crossed the 7-yuan-dollar mark for the first time in a decade.

US Treasury Secretary Manouchein also noted earlier this week that the US administration is considering new tax cuts next year, noting that a trade deal with Japan is expected to be concluded soon and that trade negotiations with France are still underway, he said. American Donald Trump prefers to continue to impose a tariff in the absence of a trade agreement with China.

Mnuchin also said Monday that the US administration is ready to sign a trade agreement with China in the event that it is in the interest of the United States, although he expressed that the impact of trade war on the US economy was not observed more than a year after the outbreak, adding that he does not see the possibility of a recession Nevertheless, there is no reason to say that the position of Federal Reserve Governor Jerome Powell is not under threat.

US President Trump recently said his administration is considering expanding tax cuts later and that the Fed, which he and Powell have repeatedly criticized, should act proactively and cut interest rates on federal funds. The FOMC is scheduled to meet on 17-18. From September in Washington the committee is expected to offer a 25 basis point rate cut for the second consecutive meeting.

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.

Otherwise, markets are looking ahead Thursday for the outcome of ECB decisions and ECB Governor Mario Draghi's press conference amid expectations that tomorrow's ECB monetary policy makers will lower interest rates to a negative range and announce new expansionary measures and likely resumed easing policies. Quantification to support the pace of growth of the eurozone economies.

Technical Analysis

The price of gold has retested the previously broken support which is now turning into resistance at 1498.00, noting that stability below this level will push the price to achieve further bearish intraday movement, and the next target is to test 1480.00.

Therefore, the bearish bias remains likely during the day, keeping in mind that breaching the target will extend the bearish wave to target 1450.00 areas in the short term, while breaching 1498.00 will stop the expected decline and lead the price to regain the main bullish trend again.

Expected trading range for today is between 1477.00 support and 1500.00 resistance.

Expected trend for today: Bearish.