Gold Analysis 17.09.2019

Gold futures fluctuated in a narrow range, tilted lower during the Asian session to witness the bounce for the seventh session in ten sessions from the highest since April 10, 2013, overlooking the decline of the dollar index for the ninth session in eleven sessions from the highest since 12 of May 2017, according to the inverse relationship between them on the eve of developments and economic data expected on Tuesday by the US economy. The largest economy in the world which includes the start of the meeting of the Federal Open Market Committee.

At 04:44 am GMT gold futures for December delivery fell 071% to trade at $ 1493.54 an ounce compared with the opening at 1500.63 an ounce, while the US dollar index fell 0.04% to 98.61 compared to the opening at 98.65.

We followed the People's Bank of China (China's central bank) to facilitate medium-term lending to maintain liquidity with 200 billion yuan ($ 28.27 billion) in loans, but kept the one-year lending rate unchanged at 3.30 percent. Analysts are expected to cut interest rates on new loans by Friday to keep pace with other central banks' monetary easing.

This came hours after the reduction in reserve requirements for banks by the People's Bank of China earlier this week, announced earlier this month. The mandatory reserve ratio for banks has been reduced by 50 basis points, and some eligible banks have been reduced by 100 basis points. Liquidity of 800 billion yuan, or $ 113 billion, will also be provided in the Chinese economy.

We also followed the Reserve Bank of Australia released the minutes of the Reserve Bank of Australia's September 3 meeting, during which the RBA monetary policy makers decided to hold short-term interest rates at all time for the second consecutive meeting at 1.00%. Which was expected by market analysts at the time.

We would like to note that the RBA monetary policy makers have expressed in the minutes that the upward trend in wage growth seems to have stalled and that risks to the global outlook are still tilted to the downside, indicating that it will consider further easing of monetary policy if necessary, with Their assertion that it is reasonable to expect an "extended period" of low interest rates to achieve employment and inflation targets.

Otherwise, markets are looking ahead to the US economy, the world's largest industrialized countries, for the Industrial Production Index which may show a 0.2% growth versus a decline of 0.2% in July, while the Energy Exploitation Rate reading may show that growth accelerated to 77.6% vs. 77.5%. This is before we see the release of the housing market data with the release of the housing index by the National Association of Home Builders which may reflect a stable at 66 during September.

Investors are also awaiting the start of the FOMC meeting later today and Wednesday in Washington, which is expected to cut interest rates on federal funds by 25 basis points for the second consecutive meeting to between 1.75% and 2.00%. With the disclosure of the expectations of members of the Committee on growth rates, inflation and unemployment in addition to the future of interest rates for the next three years.

Federal Reserve Governor Jerome Powell will hold a press conference tomorrow, half an hour after the FOMC meeting, which has been widely criticized by US President Donald Trump. Powell cut interest rates "to zero or less.

Markets are also looking ahead to Thursday's meeting of the Bank of Japan in Tokyo amid expectations that if the Fed cut interest rates, one week after the European Central Bank cut interest rates by 10 basis points to minus -0.50% with the announcement of a re-program. Buying 20 billion euros of assets by early November could put pressure on the BoJ to expand stimulus.

In view of the development of trade talks, we followed yesterday, President Trump said that his country has reached preliminary trade agreements with Japan, and markets are looking forward to the launch of a new round of trade talks between America and China at the level of deputy officials in Washington next Thursday in preparation for the upcoming high-level talks Early next month, which aims to resolve trade disputes between the two largest economies in the world.

On the other hand, we followed yesterday's remarks by US President Trump, in which he said that Iran appears to be behind the attacks on Saudi Arabia, despite the Houthis' recent announcement in Yemen that they were responsible for those attacks that disrupted about five percent of the world oil supplies. Trump's recent statements stressed that he did not want to go to war, reflecting a tone less subtle than his initial reaction.

Gold futures benefited earlier this week from the recent geopolitical strikes from last weekend's drone attacks on oil production facilities in Saudi Arabia, the world's largest oil exporter, OPEC and the third-largest producer. The world's largest oil and OPEC, carried out by the Houthi rebels in Yemen.

President Trump said Sunday that the United States was "locked and loaded based on the investigation" that Iran had launched an attack on Saudi oil facilities. Several administration officials have also recently expressed strong evidence that Iran was behind the attack, not the Houthis, they claimed responsibility for the attacks last Saturday, prompting investors earlier this week to turn liquidity into safe havens.

Technical Analysis 

Gold price did not show any strong movement yesterday, to remain stable near the main rising trend line, noting that the stochastic is gathering positive momentum and approaching oversold areas, waiting to stimulate the price to resume the bullish tendency in the coming sessions.

Therefore, we hold onto our bullish outlook provided that the price holds above 1485.00, noting that our targets start at 1524.00 and extend to 1555.00 after breaching the previous level.

Expected trading range for today is between 1485.00 support and 1525.00 resistance.

Expected trend for today: Bullish.