Gold Analysis 31.10.2019

Gold futures fluctuated in a narrow, bullish range during the Asian session to rebound for the second consecutive session from the lowest since October 14 amid the dollar index fell for the 16th session in 23 sessions from its highest since May 12 2017, according to the inverse relationship between them after the developments and economic data that followed on Thursday on the Chinese economy, the largest consumer of metals in the world and on the threshold of developments and economic data expected by the US economy, the largest economy in the world.

At 04:56 AM GMT, contracts rose 0.25% to trade at $ 1497.50 an ounce compared to the opening at $ 1,498.52 an ounce, with the US dollar index down 0.13% to 97.32 compared to the opening at 97.45.

The China Federation of Logistics and Purchasing (CFLP) unveiled the Industrial and Services Purchasing Managers' Index (PMI) which showed the manufacturing sector contracted for the sixth consecutive month in October to 49.3. 49.8 in September, beating expectations of 49.9, while service sector expansion shrank to 52.8 from 53.7.

On the other hand, investors are currently awaiting the US economy to reveal personal spending and income data which may reflect an acceleration in personal spending growth to 0.3% vs. 0.1% in August, and slower personal income growth to 0.3% vs. 0.4% in August, Core CPI reading may show a steady pace of growth in September at 0.1%.

This comes in conjunction with the release of the labor unit cost index, which may reflect the acceleration of growth to 0.7% compared to 0.6% in the second quarter, and the issuance of claims for the benefit last week on the 26th of this month, which may reflect an increase of 3 thousand applications to 215 thousand requests, Manufacturing data is released with the Chicago PMI reading which may reflect a contraction in contraction to 48.4 from 47.1 in September.

On the other hand, on Thursday we followed the end of the October 29-30 Federal Open Market Committee meeting in Washington, during which the Fed's monetary policy makers decided to cut the federal funds rate for the third consecutive meeting by 25 basis points to between 1.50% and 1.75%, which was in line with expectations.

Federal Reserve Governor Jerome Powell noted at a press conference yesterday that the Federal Reserve will temporarily stop adjusting monetary policy until the end of the year unless expectations change substantially in the coming period. The Fed will require a large and sustained movement in inflation to consider resumed rate hikes.

In view of the developments in the trade war between Washington and Beijing, which have recently witnessed optimistic statements by both sides to resolve their trade disputes and raised hopes of reaching a first trade agreement by next month, yesterday we followed Chile's cancellation of the Asia-Pacific Economic Cooperation (APEC) summit meeting. It was due to be held next month for security reasons.

Investors were looking forward to the Asia-Pacific Economic Cooperation (APEC) summit in Chile by mid-November, with US President Donald Trump and Chinese President Xi Jinping set to meet there amid hopes of a trade deal between the world's two largest economies. This could be the cornerstone for resolving trade disputes, ending trade war and tariffs between them.

Otherwise, we have just followed the Bank of Japan's monetary policy makers' decision to keep interest rates negative at 0.10%, which was expected in the markets, with the release of the Bank of Japan's monetary policy statement, and before we witnessed the Bank of Japan's press conference. Japan Haruhiko Kuroda in Tokyo, in which he noted that the Bank of Japan has moved ahead with stimulus until the inflation target of 2 percent.

Technical Analysis

The price of gold presented positive trading yesterday to move away from the level of 1489.00, to reactivate the bullish scenario again, on its way to achieve positive targets starting at 1535.00 and extending to 1555.00.

Thus, the bullish bias is likely for today, supported by a move above SMA 50, noting that a break of 1489.00 will stop the expected rally and press the price to make a bearish correction with targets starting at 1447.00.

Expected trading range for today is between 1485.00 support and 1515.00 resistance.

Expected trend for today: Bullish.